Natural gas bulls might not be too excited for the way 2017 is kicking off, as physical natural gas for Sunday January 1 through Tuesday January 3 delivery eased a few pennies on Friday. Gains in California and the Rockies were unable to offset broader setbacks in Producing Zones and Midwest Market Zones, as well as the Northeast and Mid-Atlantic.

The NGI National Spot Gas Average dropped 3 cents to $3.64. Futures prices eased as some speculated that upcoming cold had been more than fully priced into the market and that a “show-me” approach might be advisable regarding forecast cold. February futures retreated 7.8 cents to $3.724 and March gave up 7.0 cents to $3.684. February crude oil shed a nickel to $53.72/bbl.

Mid-Atlantic and Midwest locations were expected to see temperatures trend well above normal over the extended holiday period. Prices slumped. forecast that Friday’s high in Philadelphia of 42 degrees would climb to 45 Saturday and reach 58 by Tuesday, 17 degrees above normal. Chicago’s Friday high of 33 was expected to reach 39 by Saturday and 46 by Tuesday, a stout 18 degrees above normal.

Gas on Texas Eastern M-3, Delivery dropped 14 cents to $3.26, and gas bound for New York City on Transco Zone 6 fell 77 cents to $3.26.

Meanwhile, gas at the Algonquin Citygate dropped 51 cents to average $5.08, and deliveries to Iroquois, Waddington came in 32 cents lower at $4.54. Packages on Tenn Zone 6 200L fell 78 cents to $5.40.

On the West Coast the storage-challenged SoCal Citygate jumped to reach parity with PG&E Citygate as temperatures were anticipated to be well below normal in the Los Angeles Basin. AccuWeather;com forecast that the Friday high in Los Angeles of 62 degrees would drop to 59 Saturday before slipping to 57 by Tuesday, 11 degrees below normal.

Gas at the SoCal Citygate jumped 41 cents to $4.06, and gas at the PG&E Citygate added 6 cents to $4.04.

Other market hubs were mixed. Gas at the Chicago Citygate fell a penny to $3.63, and gas at the Henry Hub was quoted flat at $3.68. Deliveries to Opal, however, jumped 18 cents to $3.72.

Analysts see a market overdone to the upside vis-a-vis current weather forecasts but at the same time acknowledge potential structural market changes. “This market is pulling back this morning as it appears that the dramatic price spike since early last week has been overcooked within the context of cold weather forecasts that are beginning to see some moderation beyond next week,” said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients.

“While Arctic air will be moving across virtually the entirety of the U.S. next week in driving another huge storage withdrawal, this factor has also been priced in with the market beginning to shift focus to some expected moderation within the eight-14 day time frame. However, we are viewing yesterday’s storage withdrawal that exceeded our expectation by a whopping 36 Bcf as a bullish consideration that will be limiting downside price possibilities.

“[T]he dynamic of a decisive shift from a long-standing supply surplus against average levels that persisted for more than 1.5 years to a sizable deficit is a major supportive development that has yet to be fully priced. The approximate 80 Bcf supply deficit per yesterday’s EIA report is apt to expand appreciably next month into the 200-300 Bcf zone in increasing this market’s sensitivity to occasional and inevitable cold spells such as the one that will be developing next week.”

Gas buyers for power generation across the MISO footprint over the weekend were expected to have to deal with seasonally warm conditions followed by snow with little in the way of wind generation.

“High pressure will support mostly fair conditions and highly anomalous warmth through the weekend,” said WSI Corp. in its Friday morning report to clients. “Daytime highs are expected to rise into the 20s, 30s, and 40s. A deep upper-level disturbance is forecast to dig across the area early next week, [and] this should drive snows across the North early next week, and severe thunderstorms across the South this weekend. Total precipitation over the South will be near 1-2 inches (rain), with 1-2 inches of snow across the North.

“Reduced flow will impede wind gen [Friday] into the weekend, where output should range between 3-6 GW. Flow is expected to rebound early next week, where output should rise back to near 10 GW.”