Nobody got faked out by the semi-pause Thursday in last week’s headlong price tumble. As NGI sources had predicted, softening resumed Friday with a vengeance. Except for flat to only moderately lower numbers in the Rockies, prices tended to slump between about 40 cents and nearly $1.80. Most losses were in the range of 50-80 cents.

The weekend bearishness had been set up by Thursday’s plunges across the energy futures complex, and continuing weather moderation, along with lower weekend demand, only reinforced the trend. With a cold front starting to leave the upper Northeast Friday, virtually the only frigid weather due over the weekend was snowstorms in the northern Sierra Nevada and Cascades mountain ranges of the West. Even a Calgary trader said his region, which was fairly mild Friday, was due to get cooler again this week, but unlikely to see any snow.

The screen puzzled some cash traders; after staying a few cents lower during the morning, it turned around in the afternoon for a daily gain of almost 7 cents. However, a marketer said a financial adviser told her that Nymex locals had been short and thus bought the April contract late so they wouldn’t go home for the weekend holding any significant position. The crude oil and heating oil contracts were down on the day, although crude managed to trim earlier losses.

A glance at several key points as the week ended reveals these approximate declines from first-of-month indexes: Chicago a little more than $4, Henry Hub nearly $4, Transco Zone 6-NYC more than $6, Southern California border about $2, Panhandle Eastern about $3.80, Waha a little more than $3, and Kern River a little more than a dollar. It’s obvious that western markets, which started from lower levels in the first place, lost the least amount of ground.

A marketer compared the current situation to that of January 2001’s record indexes, which he said were followed by huge swing price falloffs approaching $6 or so in some cases during the month.

Almost no pipeline restrictions remained in place Friday, with most of the lingering ones having been shed throughout the week. Only relatively insignificant constraints were in effect on Texas Eastern and Algonquin.

A Northeast utility buyer found it significant that Henry Hub “was finally trading behind the screen today [Friday]” after a long time of being out front. “I didn’t think it [Hub] was going to get there [lower] this month.” He also called it “amazing” that Gulf Coast prices were going under $5 in some instances and even Transco Zone 6-NYC was averaging less than $6.

The utility buyer said he didn’t think anyone in his area was starting storage injections early, “but at least we’re getting to give it [storage] a rest. I would probably just defer withdrawing and buy new gas instead through the end of March. It would make just that much less that I need to inject next month.” A decision on injecting now “depends on how much you want to beat [the traditional] April [start-up],” he said. “After all, we still could get some more cold before then.”

The buyer gets some support from New York City-based Weather 2000, which in an advisory Thursday cautioned that spring’s “bark [is] worse than its bite, as colder air and snows [are] poised to spread down again” this week into the U.S. heartland. “U.S. residents should enjoy the impending milder temperatures while they can, as the pleasant weather will be all but fleeting memories next week…the warm-ups anticipated in the coming days will be rather abruptly replaced by surges of colder air and late-winter weather, commencing in the central U.S. by the middle of next week and gradually spreading to the East. When we look back at March 2003 as a whole, this short-term milder weather will appear as a ‘spike’ or a ‘mild week imbedded in a cold month.'”

“Prices coming down is good” was the sentiment of a Midwest marketer. In his perspective, half of the trading community is thinking rally this week, while the other half is thinking further down. “That means a lot of sitting on the fence on future market direction,” he said. About storage, he commented, “You’d think some people would try to start injecting early. But most of the ones I know are sticking to their usual schedules because they sense no fear about refilling.” When they’re looking at just their own accounts, the microeconomic view doesn’t look nearly as scary as the big picture of the total storage deficit, the marketer said. He did add that he was aware of “some smaller end-user accounts” that are already in injection mode.

A Florida utility buyer was unable to detect any signs yet of air conditioning load rising to any significant extent, saying, “We’re warm, but not that warm.” taking note of another MOPS pigging scheduled this week (see Transportation Notes) that could cut Zone 1 volumes into Florida Gas Transmission for a day or two, the buyer commented that MOPS is an old pipe and susceptible to more liquids build-up than others and thus more piggings.

Analyst Kyle Cooper of Salomon Smith Barney said Friday his initial estimation for this week’s storage report is for a withdrawal in the vicinity of 60 Bcf, which would compare against a year-ago volume of 92 Bcf and a five-year average of 87 Bcf. He added, “Once again, our confidence level remains quite low. Last week we obviously underestimated the extent of demand loss. There were numerous reports that some of that demand returned this week. How much is obviously the key question. Thus, this presents a great deal of doubt.”

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