As expected, most points continued to soften by varying amounts Friday. Losses ranged from as little as about a dime to just over a dollar, with many gradations in between represented. The few upticks tended to be associated with the Midwest market, such as Chicago citygates, Dawn, and Northern Natural-Ventura.

One source suggested that the market might have been even more bearish if not for some morning screen strength. Gas futures eventually pushed even higher before settling for a daily gain of just under 15 cents. Nymex’s heating oil contract was super-bullish and crude oil futures also realized a big advance, as geopolitical developments made it appear increasingly likely that war with Iraq could come as early as this week.

With warmer weather due Saturday, the Northeast recorded drops of a 5 to 70 cents despite a new arctic front expected to invade the region Sunday. “We’re supposed to be mild Saturday, colder Sunday and back to pretty cold again through next week,” said a Northeast utility buyer. He expects intraday business to be brisk Monday. Commenting on Friday’s softness, he said, “It’s all relative; prices are down, but still much higher than they normally would be.”

Meanwhile in the Midwest, Chicago and some other points reacted to forecasts of freezing weather spreading out from the Upper Plains to the rest of the area Sunday. “Sunday will be the really cold day, but it will be warmer on both Saturday and Monday,” said a Chicago trader. She noted an advisory by NGPL saying it would limit hourly takes in the Market Delivery Zone beginning Sunday, with an OFO possibility (see Transportation Notes). “That advisory tells us that NGPL is worried about its storage situation,” but the trader’s perception was that the Chicago-area utilities are fairly comfortable with their own storage inventories.

A Midwest utility buyer said it was “very unusual for Northern [Natural Gas]” not to apply a System Overrun Limitation to all market area zones (see Transportation Notes). “I can’t recall that happening since about the mid 1990s.” The SOL didn’t apply to his utility since he was in NNG’s Zone ABC. Despite the SOL, demarc prices were stair-stepping downward in dime increments for the buyer as Friday trading proceeded.

Prices fell off in the Rockies “like most everyplace else,” a western marketer said. Denver will be seeing high temperatures of up to 60 degrees this week, although it will get to near freezing at night, he added.

“Prices are too high,” said a Florida utility buyer in explaining why she had no deals to report for the weekend. She was unaffected by Florida Gas Transmission’s leak problem, but observed, “They sure fixed it fast” (see Transportation Notes).

Analyst Kyle Cooper of Salomon Smith Barney said his initial expectation is for EIA to report a storage draw around 140 Bcf for last week, which would compare with 91 Bcf a year ago and a five-year average of 63 Bcf. “Our confidence level this week is rather low. With this report representing the first week in March and representative of the new very high monthly index, it is unclear to what extent demand has suffered. The recent reports have indeed indicated a degree of demand loss. However, it is unclear how much demand has been lost this week.”

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