Energy futures finished the week on an up note as some strength on Wall Street trickled through to most all commodities and colder weather began to seep into portions of the country. November crude gained $2 to close at $71.85/bbl while November natural gas finished at $6.786, up 8.3 cents from Thursday’s close and 25.3 cents higher than the previous week’s finish.

The Dow Jones Industrial Average had a strong showing in early trade before turning over and finishing lower on the day. After reaching a high of 9,281 points, the Dow ended up closing at 8,852, down 127 points.

“There was a little bit of strength out there Friday in natural gas, but there was a big collapse at the end of the regular session,” said a Washington, DC-based broker. “Around 1 p.m. [EDT], we were up at $6.975, but by the time we closed we had given a lot of that back. We had a little bit of cold weather coming in, but I hardly think that is worthy of a big rally. Maybe it was worthy of exactly what we ended up with. The stock market was also a factor as it was strengthening most of the time that energy was trading. If the stock market goes up, most of the commodities with the exception of gold will also move higher. There is a lot of indecision out there, so there is some herd mentality.”

Commenting on the 79 Bcf storage injection report Thursday morning that put working gas in storage at a healthy 3,277 Bcf, the broker said he wasn’t all that surprised that futures prices did not crumble as a result. “The general feel I’ve gotten from the various winter forecasts is that it is going to be on the colder side. The Farmers’ Almanac was predicting a very cold winter and AccuWeather’s Joe Bastardi was saying there was the potential for a colder-than-normal winter, so I don’t think anyone has written off winter in terms of what we might get.”

As for prices, the broker said even with the recent rallies, the downside is still open as well. “We are currently in this $6.500 to $7 trading range and our technical model is flirting with bullish mode,” he said. “It is really getting close to kicking in. That said, the downside could still open up some more. While I am a long-term bull on energy, I don’t know whether all of the ships have hit the rocks yet. There are a couple of big hedge funds in trouble now. Citadel was reported to be down 22% and some others have had to have been liquidating funds.

“Who knows where the other land mines are that still might go off and cause worries that cause another big ratchet lower? Is it long-term sustainable? The answer is no, but there might be something out there that could break us down below $6. Even though the feds have come to the rescue, there are still a lot of things out there in hedge fund land that are still unknown. There is nothing the feds can do about them because it is completely unregulated and therefore an unknown quantity. I don’t think that some of these unknowns could put us into a 1929 depression scenario, but there could still be something out there that would create another lurch down before we eventually begin rebuilding.”

Some top analysts also see the market buffeted by weather factors and the ongoing financial uncertainties rocking Wall Street. Forecasts for a cooler-than-normal last half of October will be competing with broad financial issues as prominent price drivers in the weeks ahead, according to Jim Ritterbusch of Ritterbusch and Associates.

“While broad-based financial issues and their implications for some slippage in industrial demand for natural gas remain as a background bearish consideration, this factor could receive a significant offset in the form of a colder-than-normal winter,” he said. “For now, we are still viewing nearby futures as a trading affair mainly within the $6.500 to $7 zone.”

Slippage in industrial demand was also on the minds of other observers. Lower petroleum prices may eventually have a positive economic impact and ultimately stimulate more industrial demand for natural gas, but it may be a while, according to a long-time industry analyst. Goods produced when petroleum prices were much higher have resulted in some high-cost inventory, which needs to be disposed of. “Producers have to work off the high-priced stuff so the consumer is not going to get the relief that he would otherwise if producers hadn’t been so darn bullish,” said Mike DeVooght of DEVO Capital Management, a Colorado risk management firm.

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