Physical natural gas for weekend and Monday delivery managed a small advance in Friday’s trading as outsized gains in the East overshadowed hefty declines in the Midwest and California.

The NGI National Spot Gas Average added 2 cents to $2.03, and eastern points on average added close to 40 cents. December futures added 0.7 cent to $2.371 in lackluster trading, and January shed 0.7 cent to $2.532. December crude oil dropped 91 cents to $44.29/bbl.

Analysts are seeing a deeply oversold market and one that is ripe for rebound, especially by the second half of 2016. “There is no arguing against what mild weather is failing to do for the demand side of the ledger this November,” analyst Breanne Dougherty of Societe Generale in New York said in a recent report. “The current weather outlook has resulted heating loads trending near the bottom of the five-year range; and although the historical storage record did not get breached by end October, that happening imminently is pretty much a certainty. This should keep a decent cap on any upside price movement over the next few weeks.

“That being said, we continue to see the market as heavily ‘oversold,’ which brings upside price risk to winter 2015-2016 contracts in particular as the market progresses into core winter. Most importantly, however, confidence in our constructive 2H2016 and beyond price view rises with every day Cal 16 stays under $2.75/MMBtu. Producers are feeling the pinch, 3Q2015 results highlight the likelihood of further capex reductions.

“Beyond winter 2015/2016, the knock-on effect of a sustained sub-$3/MMBtu price environment, which the market has now been in for some while, should not be overlooked. Our 2016-2017 outlook remains focused on the structural undercurrents [of] reduced producer investment becoming increasingly certain, which will translate into a stagnant near – term production trajectory and, firming baseload (non-weather dependent) demand will inevitably strengthen that side of the ledger. Our view is for bearish sentiment (albeit stable/stronger prices than the current curve) to dominate through 1H2016 in anything other than a sustained cold winter 2015/2016 scenario; but the above mentioned structural undercurrents should start translating into fundamental data points in summer 2016, supporting our particularly more constructive price view for 2H2016 and beyond.”

Societe Generale forecasts a Q3 Henry Hub price of $3.12 versus current Nymex quotes at about $2.63. Q2 Henry Hub is forecast at $2.62.

In the more immediate term, traders are looking for the market to hold recent gains but are anticipating an opportunity to go short about another 15 cents higher. “Although this market has swung on both sides of yesterday’s close overnight, we are expecting a steady-strong finish to this week’s trade as it would appear that some structural shifts are developing in downsizing recent weekly storage injections,” said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients.

“[Thursday’s] 52 Bcf injection was much below industry ideas, especially ours, in furthering a string of several downside misses that are helping to offset the impact of mild fall conditions. While the storage increase that was less than the five-year average hike of 58 Bcf takes a 4.1 Tcf supply peak off of the table, a record supply north of 4 Tcf is still a near certainty given yesterday’s lift to the 3.929 Bcf level.”

Ritterbusch believes that “yesterday’s strong price advance of almost 4.5% will prove sustainable going forward but in erratic fashion as the market responds to daily updates to the short term temperature views. For now, above-normal temperature outlooks, especially across the upper Midwest, are still favoring unseasonably mild conditions with some outlooks beginning to stretch through the third week of this month.

“We are maintaining our expectation for an advance in nearby futures up into the $2.45-2.50 zone where we will look to re-establish short holdings in anticipation of a return to this month’s lows of about $2.18 that were established a week ago.”

In the physical market, Midwest quotes slid about a dime. Gas on Alliance was seen 9 cents lower at $2.14, and deliveries to the Chicago Citygate fell 7 cents to $2.17. Gas on Consumers for the weekend and Monday shed a dime to $2.19, and deliveries to Michigan Consolidated were quoted 14 cents lower also at $2.18. Gas at Joliet fell 9 cents to $2.14.

Conversely, quotes at eastern points bounded higher. Gas at the Algonquin Citygate changed hands $1.80 higher at $4.99, and deliveries to Tenn Zone 6 200L vaulted $1.20 to $3.84.

In the Marcellus gas on Dominion South rose 8 cents to $1.06, and deliveries to Tennessee Zn 4 Marcellus were quoted at 78 cents, unchanged. Gas on Transco-Leidy Line added a penny to 88 cents.

Gas buyers across the PJM footprint looking for supplies to fuel gas generation will have some renewable generation over the weekend to work with. WSI Corp. in its Friday morning report said, “A storm system and its associated cold front will push across the power pool [Friday] with a round of showers and perhaps a few thunderstorms. It will be windy and mild along with a touch of humidity. Highs will range in the 60s and 70s, warmest east.

“A gusty southwest-to-northwest wind associated with the storm system will drive strong wind generation today. Output will peak as high as 5 GW. Wind gen will likely subside and become light during the weekend into the start of next week.”

Thursday’s hefty storage build of 52 Bcf is likely to get a replay next week as the National Weather Service (NWS) forecasts a much below normal accumulation of heating degree days (HDD) in major energy markets. For the week ended Nov. 7, NWS predicts New England will see a relatively light 79 HDD, or 65 below normal, and the Mid-Atlantic will have to endure 57 HDD or a whopping 73 HDDs below normal. The greater Midwest from Ohio to Wisconsin is expected to have just 56 HDD, or 89 below normal.