With a few flat to barely higher points thrown into the mix, most of the cash market was mildly softer Thursday. A majority of declines were capped at a little more than a nickel, although falls of about 12-15 cents were recorded at scattered points such as Texas Eastern M-3, San Juan-Blanco and the PG&E citygate.

Citing prospects of milder weather virtually everywhere for the weekend (even in the snow-buried Rockies), weaker overall energy futures and the normal demand slump accompanying a weekend, sources said it was reasonable to expect softening prices throughout the market Friday. A strong indicator of how Upper Midwest temperatures are moderating came from Northern Natural Gas, which is implementing a System Underrun Limitation for Saturday (see Transportation Notes) in contrast to this winter’s string of System Overrun Limitations.

The natural gas screen eventually eked out a modest gain of less than 3 cents, but that represented a major retreat from a spike of 30 cents or so shortly after the morning storage report came out. Futures even traded in the red for a while before getting back into positive territory. Cash traders could see little apparent reason for the screen’s fallback except to suggest it was in response to continuing major weakness in the crude oil and heating oil contracts. Oil futures also had risen sharply early on upon reports of some Iraqi wells being set on fire, but subsequently dove as traders learned the number of fires was small.

The Energy Information Administration said 85 Bcf was withdrawn from storage last week, a volume that exceeded the general range of prior expectations. Although most swing business had already been completed by then, late numbers shot up in deals done after the report, several traders said.

A Denver-area marketer reported that “half of us made it in today [Thursday], but the office was closed Wednesday” by what is being recorded as the city’s second-largest snowstorm in history. The snow should be melting by the weekend, he continued. “I thought we were skimming by pretty well this winter, but we can still get a good amount [of snow] during March. In fact, there’s more snow in our seven-day forecast for early last week, but it won’t be nearly as bad as this last one.”

The marketer added that he was calling around Thursday afternoon trying to see what people are thinking about April bidweek, but generally got replies along the lines of “too early; try me again next week.”

A Florida utility buyer commented that Florida Gas Transmission’s issuing Overage Alert Day notices in mid-March could be signaling “a long hot summer on the way.” Temperatures were in the mid 80s Thursday afternoon in northern Florida, she said.

A producer who trades the Gulf Coast and Northeast said he didn’t know why the storage report resulted in the short-lived screen spike. “That [report] should have been factored into the market already.” It was rainy and chilly Thursday in the lower Northeast, but Friday’s temperatures were due to be near 60, “so talk I’ve heard about cold weather supporting gas prices is [ridiculous]. Maybe some people got spooked” by the beginning of war into keeping Thursday’s softness mild in most cases, he said. Continuing on the war topic, the producer said “the only thing certain we know is uncertainty. If things turn nasty overnight in Iraq, it could jack oil [prices] right back up and gas would be sure to follow.”

He is seeing little in the way of fuel switching going on, even with crude futures having lost more than $7/bbl in last week or so. “Quite a few customers have already been switched over to fuel oil since gas prices got so high late in February, and they’re not changing back to gas. I’m also not seeing any significant switching from gas to fuel oil.”

“It’s a pretty quiet market for right now, and that’s good,” a Gulf Coast marketer commented. “You want some volatility every now and then, but we had more than enough of that in late February and early March to suit me for a while.” A western trader seconded the marketer’s assessment.

Lehman Brothers analyst Thomas Driscoll estimated that next week’s storage report will show a injection “of roughly 70 Bcf versus a withdrawal of 75 Bcf one year ago and the five-year average withdrawal of 65 Bcf.”

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