As predicted, there was enough cold weather load in combination with a rebounding screen to extend mild firmness at most points Thursday. However, Northeast citygates fell by amounts ranging up to either side of 20 cents based on forecasts of moderating weekend weather, and a few other points were flat to down a nickel or so.

One source noted that because Thursday’s trading was through the end of the month (that is, for Friday-Sunday flows) and Friday’s deals will be for Monday only, that made for a tougher call on price direction Friday. Normally he would have expected milder weather after winter storms in the Southeast and parts of the West have dissipated, along with the typical decline in industrial demand over a weekend, to have spurred across-the-board softening. “Now I’m not so sure” because the deals will be solely for a weekday and there is a possibility of some colder weather returning early next week in the Northeast and Midwest, he said. Also, bullish screen reaction to Thursday morning’s storage report may provide support to Friday’s cash numbers, he added.

The Energy Information Administration exceeded most prior expectations by saying storage inventories fell by 164 Bcf last week. Nymex players took the report and ran with it for a gain of 17 cents in the April contract’s first day as prompt month.

The Northeast price losses were hardly surprising as The Weather Channel expects temperatures there to keep rising a little each day through the weekend. But the Southeast’s snowstorm will focus further on North Carolina Friday before fading by the weekend, TWC said, and the system that was dumping heavy snows Thursday from the Sierra Mountains of Northern California through Utah, western Wyoming and Idaho will move through Montana Friday before invading Canada’s central prairie provinces.

The bad weather was chiefly responsible for the West seeing most of the larger increases of up to a dime, even though Kern River continued to report high linepack on its bulletin board. Northern Natural Gas also was experiencing more linepack than it wanted, so it declared a System Underrun Limitation for Saturday (see Transportation Notes). Even so, demarcation and Ventura quotes rose by about a nickel and nearly a dime respectively.

On the other side of the linepack coin, Florida Gas Transmission told shippers that it might need to issue an Overage Alert Day notice to keep linepack from getting too low. But a utility buyer confirmed that traders in the Florida market routinely discount such warnings as mostly a psychological ploy by the pipeline to keep from having to implement the OFO-like restriction.

Most traders, if they already hadn’t done so, were winding up March business, leaving little to be finished Friday. An industrial end-user in the Midwest found basis diverging widely on ANR’s two mainlines, quoting the Southeast leg at last-day Nymex minus 4 cents and the Southwest leg at minus 28 cents. However, the March spread was approximately equal to Thursday’s end-of February gap.

A producer reported selling at Sumas in the low $4.40s, while another trader quoted Chicago citygate basis at plus 4 cents.

Lehman Brothers analyst Thomas Driscoll, noting that the EIA storage report exceeded his guess by 9 Bcf, said, “Over the past three weeks, withdrawals have averaged 6 Bcf per week stronger than expected. If this trend continues for the remaining five weeks of winter, we would lower our end of season storage estimate by 30 Bcf to 920 Bcf… It is likely that the recent softening in gas prices has led some consumers to increase natural gas demand. We continue to believe that some additional weakness is likely in the coming months and we are maintaining our Q2 and Q3 gas price forecast of $4.50-5.00/MMBtu. Our full-year 2004 estimate remains $5.00/MMBtu. Our end-of-season storage estimate of 950 Bcf remains unchanged and assumes normal weather for the remainder of the heating season.”

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