Cash traders appear to be convinced that the 2009-2010 winter is pretty much a done deal already, even with temperatures starting to fall again in several regions. Prices fell at nearly all points Monday.

A few flat points, all in the West, were the exceptions to losses ranging from 2-3 cents to about a quarter. A fairly large majority of the drops were in double digits.

Even a new snowstorm targeting the Northeast failed to prevent regional citygates from recording most of Monday’s largest price softening.

Futures continued to offer no support to the physical market, with Monday’s loss of 14.9 cents in the March contract exceeding the previous Friday’s decline of 12.8 cents (see related story).

It may be related to required storage usage as the last month of the traditional withdrawal season nears, but forecasts of colder weather arriving Tuesday in most of the Northeast, Midwest and South (with snow forecasts in such southern climes as North Texas and North Louisiana) had no impact in stanching further price declines. Softness was a bit more understandable in the West as Rockies temperatures were slowly beginning to edge up toward the freezing level.

One analyst had a moderately bullish signal for gas prices as he noted that significant refueling maintenance outages of nuclear plants typically begin in March, which will require gas-fired generation to make up much of the difference (see related story).

Northern Natural Gas, which has a normal system-weighted temperature of 24 degrees at this time of year, projected that the average would fall to 12 Tuesday and 8 Wednesday before rebounding a bit to 14 Thursday. The frigid forecast prompted it to issue a System Overrun Limitation for all market-area zones Wednesday (see Transportation Notes). MRT also announced a cold weather-related restriction, but Tennessee rescinded an Imbalance Warning.

The Baker Hughes Rotary Rig Count said two drilling rigs were added to the U.S. search for natural gas during the week ending Feb. 19, with one each being activated onshore and in the Gulf of Mexico. The latest increase to 893 rigs represented a 7% rise from a month ago, Baker Hughes said, but represented 12% fewer rigs than year-ago levels.

SunTrust Robinson Humphrey analysts noted that according to Baker Hughes, horizontal rigs now account for about half of total U.S. drilling activity. “To get a more distilled look at the split between horizontal oil and gas activity, we turned to Smith International’s ‘more granular’ data and found more than 60% of gas-directed drilling is horizontal while roughly 35% of oil-directed drilling is horizontal,” they said. “To place in context, at this time last year roughly 40% of gas-directed drilling was horizontal while slightly less than 30% of oil-directed drilling was horizontal.”

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