November natural gas forward prices shed an average 8 cents from Sept. 29 to Oct. 5 as traders who were hoping for some early-season cold quickly realized any sustained heating demand would prove elusive through at least the middle of the month, according to NGI’s Forward Look.

The weakness in the market was apparent from the get-go. Nymex November futures plunged 9 cents on Monday to $2.916, which is only marginally above the year-to-date low. The dive came as medium-term weather outlooks showed heating degree accumulation to be near record lows, with some states in the Mid-Atlantic still warm enough to generate some cooling demand.

The mild forecast comes as unseasonably strong high pressure is expected to dominate much of the country through the week, according to NatGasWeather. There’s potential for colder systems to arrive across the northern United States during the last 10 days of the month, but more of the weather data would need to come on board for the markets to be convinced, the weather forecaster said.

Still, analysts at Mobius Risk Group said it’s worth noting that six of the 10 warmest Octobers, in the past 67 years, ended up transitioning to cooler-than-normal Novembers. Traders remained wary, though, as additional market weakness occurred on Tuesday, with November futures closing below the 40-day moving average for the second consecutive day at $2.895. Markets rebounded a bit on Wednesday thanks to a concurrent bounce in cash trading, and expectations of a lean storage injection added a little extra juice for the market.

But alas, even Thursday’s bullish storage report that indicated stocks had finally fallen to a deficit to historical levels wasn’t enough to keep the momentum going. The U.S. Energy Information (EIA) Administration reported a 42 Bcf injection into storage inventories for the week ending Sept. 29. The reported injection was about 9 Bcf lower than consensus estimates and far below the 76 Bcf that was injected last year and the 91 Bcf five-year average. At 3,508 Bcf, stocks are currently 161 Bcf less than last year at this time and 8 Bcf below the five-year average of 3,516 Bcf.

Thursday’s EIA report “did reveal a very tight market, though we expect the print next Thursday to be significantly looser, and a series of larger prints with this bearish weather can be expected,” Bespoke Weather Services said Friday.

The New York-based weather forecaster said there is some risk for additional breakdown in prices Friday after the bearish reversal off of resistance that occurred Thursday, but it still expects that once cold risks begin to get added back into the forecast (likely within the next week or two), prices will be able to recover quickly.

On Friday, the Nymex November contract briefly swung into the black but remained in negative territory for the better part of the day, ultimately settling at $2.863, down 6 cents from Thursday’s regular session finish.

In addition to the bearish weather outlook and possible string of larger injections in the coming weeks because of the mild temperatures, traders appeared to be pricing in the potential impacts of yet another tropical storm heading toward the Gulf Coast.

Tropical Storm Nate was gaining steam as it headed north toward an expected landing Sunday on the northern Gulf Coast, possibly near New Orleans. The National Hurricane Center in its 1 p.m. CDT update said Nate was about 125 miles east-southeast of Cozumel, Mexico, moving toward the north-northwest near 21 mph. This general track was expected to continue “with a marked increase in forward speed” through the weekend.

While Nate was not expected to be as strong a storm as hurricanes Harvey and Irma, its track is straight through the main Gulf of Mexico oil and gas producing area, which the two previous storms touched only tangentially. By Friday morning, Nate already had reduced natural gas production from the offshore by more than half to a multi-year low about 1.713 Bcf/d.

Using operator reports submitted as of 11:30 a.m. CDT Friday, the Bureau of Safety and Environmental Enforcement (BSEE) estimated that more than half — 53.2% — of gas production was shut in, about 1.713 Bcf/d. About 71.1% of current oil production from the GOM also had been shut in, equating to about 1.24 million b/d.

As of midday Friday, BSEE said personnel had been evacuated from 66 production platforms, 8.96% of the 737 manned platforms. Personnel also have been evacuated from five non-dynamically positioned (DP) rigs, equivalent to 20% of the 20 DP rigs working in the GOM. Eleven DP rigs had moved off out of the storm’s path as a precaution, representing 61% of the 18 DP rigs in operation.

Still, with the storm expected to reach only Category One status and a storm surge of four to seven feet, any disruptions to production were expected to be short lived. In addition, the storm and its heavy rains were expected to keep temperatures down, thereby softening demand in the region.

AccuWeather was forecasting temperatures for New Orleans to reach 89 degrees on Friday, with a real-feel temperature closer to 100 degrees. Over the weekend, temperatures were expected to stall in the mid-80s, with the strong winds keeping real-feel temperatures in the upper 80s.

Taking a closer look at the futures and forwards markets, there were few surprises as most markets succumbed to shoulder-season pressure. Nymex led the way, with November futures shedding 8 cents from Sept. 29 to Oct. 5 to reach $2.923, December dropping 8 cents to $3.103 and the balance of winter (December to March) sliding 6 cents to $3.19.

Despite all fundamental signs pointing lower, the market still could be due for a rebound in the days ahead as technical indicators point to a market that is oversold.

“Right now, November is trading near the bottom of the 20-day Bollinger Band, a support level around $2.84. Furthermore, slow stochastics levels are at 15.48, which is below the 20 level many technicians believe marks an oversold market. Both would argue for a rebound,” said NGI’s Patrick Rau, director of strategy and commodity research.

Rau said the 200-day moving average (MA) — currently at $3.07 — has served as strong resistance for November since late May. “November has challenged the 200-MA several times, and while November did manage to break above it for a few days in September, it quickly fell back below (and then some),” Rau said.

And while technical indicators show stronger prices ahead for the prompt month, analysts at Barclays Commodities Research said winter prices on the whole should be higher as well.

“We believe that the markets are currently not fully pricing in the probability of a colder-than-normal winter,” analysts said in a Tuesday report to clients.

Barclays attributed the lower-priced forward curve to higher storage inventory builds following hurricanes Harvey and Irma, increasing production levels and two mild winters in a row. Indeed, Henry Hub cash prices averaged $3.13 for the December-March period, 6 cents below where futures prices sat Thursday for the same time period.

While Barclays sees potential upside to prices this winter, this will be largely dependent on winter weather and pipeline start-up delays. Early weather outlooks point to the winter of 2017-18 (December-March) being 4.9% colder than the five-year normal and 15% colder than last year, which implies a price of $3.46/MMBtu for the period, based on the Barclays model.

Given winter-on-winter supply and demand, Barclays expects balances to be about 2.2 Bcf/d tighter than last year. This would result in storage withdrawals averaging 15 Bcf/d and ending March at around 1.7 Tcf. If this season sees yet another mild winter, then storage draws would average 13 Bcf/d and EOS inventories would be closer to 2 Tcf, Barclays said.

“Assuming there is a normal winter and storage levels end March at 1.7 Tcf, it will be the first March below the five-year average since 2015 (1.45 Tcf). This should set the stage for U.S. storage inventories to stay at or below the five-year average for most of 2018, a bullish development, given the last two years of storage surplus with which the market has dealt,” Barclays said.

On the production front, Barclays expects winter-on-winter production to grow 5.6 Bcf/d. However, if it falls short by 2 Bcf/d, 1Q2018 prices could be 5% higher than its base case. A one-month delay in phase 1B and 2 of Energy Transfer Partners LP’s (ETP) Rover Pipeline would result in production growth falling about 0.5 Bcf/d. Any greater delay should be viewed as bullish, analysts said.

ETP expects the remainder of Phase 1 of the 3.25 Bcf/d, 713-mile Rover Pipeline, to the Midwest Hub in Defiance, OH, to be completed by the end of the year. Phase 2 is on track for completion by the end of March.

Looking at other market hubs across the country, most pricing locations followed the lead of the Nymex. In the Northeast, however, points along the Iroquois Pipeline posted far more substantial losses as maintenance continues to restrict flows at various points along the pipeline.

Iroquois Zone 2 November forward prices tumbled 15 cents from Sept. 29 to Oct. 5 to reach $3.152, while December plummeted 16 cents to $4.701 and the balance of winter (December to March) dropped 7 cents to $6.10, according to Forward Look.

At Iroquois Waddington, November was down 22 cents during that time to $3.002, December was down 24 cents to $4.508 and the balance of winter was down 7 cents to $5.35.

Over in the West, Northwest Pipeline-Sumas got an unusual bump in prices this week amid some ongoing maintenance on the system and bloated storage inventories in the region. On its website on Friday, pipeline operator Williams warned customers not to bank during the weekend of October 6 as Jackson Prairie Storage is full and Northwest has limited flexibility.

Meanwhile, capacity through two compressor stations along the Northwest Pipeline — the Meacham station in Oregon and the Snohomish station in Washington — continues to be restricted because of planned maintenance.