Except for plunges in the Rockies, the market ended the week on a considerably stronger price note Friday than some had been expecting. A few Midcontinent pipes (Williams, NGPL-Midcontinent and Reliant-West) were close to either side of flat, but gains at other non-Rockies points ranged from a little less than a dime to more than a dollar (Algonquin citygate). A majority of the upticks were between a dime and a quarter, with much larger ones clustered in Northeast citygates.

Cash came into the day with a leg up from a bullish storage report on Thursday and the Nymex gain of nearly 20 cents in response. And, sources said, it was already apparent that the East was going to get little if any of the previously forecasted weekend break from freezing weather. Outside of the mild Florida peninsula, even the entire South was scheduled to spend a chilly weekend.

In a move that likely will be reflected in Monday’s cash market, the screen continued its advancing ways Friday with an increase of more than 21 cents that took it above the key psychological level of $6. Probably just as important was a spike in heating oil futures to a 23-year high and a rise of nearly a dollar in the March crude oil contract to more than $35/bbl. Although Venezuela’s strike ostensibly is over and the nation reportedly had restored oil exports to about half of their normal levels last week, Nymex traders apparently were betting on the imminence of war with Iraq.

As a Northeast utility buyer said in quoting a Transco Zone 6 (non-NYC) citygate at $7.60, up more than half a dollar from Thursday, “We’re expecting eight inches of snow this weekend, and next Tuesday and Wednesday we’re looking at an average of 22 degrees.” Commenting on the flimsiness of some of this winter’s forecasting, he said he had already seen outlooks of both moderation and more severe cold for mid-February.

A New England utility buyer said she “kind of expected today’s spikes.” Towards the middle of this week “will be really cold, and people were looking ahead to that, as well as the weekend’s lack of relief.” She estimated that seven inches of snow had accumulated in her city by the time she went out for a lunchtime meeting. Several utilities in the Northeast were starting to cut back on storage use late last week, the buyer said. “They were getting more concerned that if this kind of weather continues,” they could be depleting storage accounts next month and face the possibility of having to buy gas at $15, or about twice current price levels.

The Midwest also was scheduled to remain in a deep freeze over the weekend, which prompted Northern Natural Gas to declare a new System Overrun Limitation for Saturday, one day after ending a prior SOL (see Transportation Notes).

“We kind of assumed there would be an SOL on NNG and bought accordingly,” said a utility buyer reporting demarc and Ventura deals in the low $6.20s. He added that it was “very unusual” for the pipeline to wait until Friday afternoon to announce the OFO-like notice, which he said restricts imbalance tolerances. “Usually you can trade during the morning knowing whether one [SOL] will be in effect the next day or not.” The buyer said he was kind of surprised that NNG let Friday go by without one because “it was 18-20 below in Minnesota this morning.”

The West was losing some of its heating load with only the Great Basin and upper Rockies areas expected to continue experiencing severe cold. But despite CIG leading Rockies softness with a fall of more than 90 cents, late prices were rebounding substantially, a marketer said. “Opal started weak today, then strengthened” back to the $4.30s as more buyers emerged, he said. He saw San Juan-Bondad numbers exhibit an up-down-up pattern, saying they followed Opal’s late rally higher.

“I don’t know if we need to be at $6-plus, but it is cold in the Midwest,” according to another marketer. “Friday morning was supposed to be the coldest part of this snap. At nine degrees it was plenty cold. So one would think prices would have come off as we go into the weekend with expectations of rising temperatures on Monday, and the storage report having run its course. But it is not that way. Cash is on the rise. It looks to me that we will be stronger again Monday.”

Salomon Smith Barney analyst Kyle Cooper said his initial estimation for this week’s storage report is for a draw in the 150-160 Bcf range. “Clearly the weather forecasts remain bullish,” he continued. “Considering the below normal temperatures now forecast, ending storage levels of nearly 700 Bcf are quite possible. In the middle of January, we obviously did not project either the magnitude or the duration of the cold weather and thus discounted projections of end of March storage levels that low. However, it clearly emphasizes how dramatically weather affects demand.”

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