While most natural gas market points for the week ended Dec. 4 managed to show gains, a relatively small number in the Rockies, Northeast, and California registered losses and pulled the national average barely into the loss column. The NGI Weekly Spot Gas Average shed 2 cents to $2.07.

Of actively traded points, Enable West grabbed the podium for the week’s greatest gain with an advance of 14 cents to $2.08. In the loss column, Tennessee Zone 6 200 L fared the worst, losing 71 cents to $2.53 with Algonquin Citygate not far behind at a 60-cent drop to $2.52. Regionally, the Northeast lost the most, dropping 18 cents to $1.75 and East Texas had the greatest addition at 7 cents to $2.12.

The Rocky Mountains skidded 4 cents to $2.15 and the Midwest added a penny to $2.17. California came in 2 cents higher at $2.41.

South Louisiana and South Texas both added a nickel to $2.13 and $2.10 respectively and the Midcontinent rose by 6 cents to $2.11.

January futures fell 11.3 cents from its pre-Thanksgiving settlement to $2.186 and that was partially tempered by a positive response to Thursday’s Energy Information Administration (EIA) storage report showing the season’s first withdrawal at 53 Bcf, somewhat stouter than market expectations and prices initially staged a short advance, eased, but turned around to settle higher. At the close January had added 1.6 cents to $2.181 and February gained 1.2 cents to $2.232.

Short term traders are cautiously optimistic January futures will at least hold steady. “The number came out right where we expected, and it came off a bit and rallied right back. That gives the market a little support,” said a New York floor trader. “At least it held up and didn’t rush down to $2.10 and fall behind. It traded at $2.14, held that and rallied right back up. If it breaks $2.22 you have to look at $2.30 but that is going to be tough. That whole gray area between $2.23 to $2.25 is going to be tough to get through.

“I like the play on the upside because it held. I would put a protective stop at $2.14 to $2.15,” he said.

Ahead of the EIA report traders and analysts were looking for a pull in the upper-40 Bcf to lower-50 Bcf range, which would put the figure right in line with long-term averages. Last year, 42 Bcf was withdrawn and the five-year pace is for a 48 Bcf pull. ICAP Energy calculated a 47 Bcf decline, and industry consultant Genscape was looking for a 54 Bcf draw. A Reuters survey of 26 industry cognoscenti revealed a sample mean of 51 Bcf with a range from -24 Bcf to -66 Bcf.

Some saw a bullish surprise in play. “While 47-51 Bcf in net withdrawals would still look neutral to modestly supportive relative to a 42 Bcf decline a year ago and the 48 Bcf five-year average for the date, this could still be seen as a disappointment given the early November forecasts for a more intense cycle of cold,” said Tim Evans of Citi Futures Perspective.

“With our model returning a somewhat more robust 60 Bcf net withdrawal, we see some chance of a minor bullish surprise but would anticipate only a limited price reaction given the more bearish intermediate-term picture,” he said in closing comments Wednesday.

Other analysts also saw the potential for a surprise but for different reasons. “[L]et’s not forget last week was a holiday week, and a holiday that also featured the first across-the-board draw of the season, too,” said John Sodergreen, editor of Energy Metro Desk. “We don’t think that has ever happened before. And total generation outages were up last week too…We see sparks flying at 10:30 Thursday morning — just like last year, where we had a very fast 7-cent move in the first second following release. EIA came in at -22 Bcf (it was later adjusted) and the market was expecting a pull of -38 Bcf.” Sodergreen’s survey was looking for a 43 Bcf pull.

Using the new 5-region format inventories now stand at 3,956 Bcf and are 543 Bcf greater than last year and 247 Bcf more than the five-year average. In the East Region 16 Bcf were pulled, and the Midwest Region saw inventories fall by 18 Bcf. Stocks in the Mountain Region were lower by 3 Bcf, and the Pacific Region was down 6 Bcf. The South Central Region, closely similar to the former Producing Region, shed 10 Bcf.

Physical traders Friday mulling weekend and Monday delivery elected to pass on three-day deals and instead rely on the ease of electronic communications to make incremental purchases should the need arise in spite of the fact the calendar says this is the high-demand period for natural gas.

Only a handful of market points made it to the positive side of the trading ledger Friday, and most points were down a few pennies to a nickel. The NGI National Spot Gas Average fell 7 cents to $1.99. Eastern points shed closer to a dime. Natural gas futures made gains, but with less than a 5-cent range in the December contract the advance can hardly be called convincing. At the close, January had gained five-tenths of a cent to $2.186 and February had risen 1.5 cents to $2.247. January crude oil proved volatile with the January contract falling $1.11 to $39.97/bbl.

In the near term, traders see a market comfortable in its own skin. “I think you have a comfort zone against $2.16 to $2.20 up to $2.27 working to support the market,” said a New York floor trader. Right at these levels I don’t think there is fear of anything happening and I think there is scale down support buying just in anticipation there might be a cold snap coming in.

“No one is looking to sell the market and any shorts that come into the market are met with scale-down buying.”

Other traders see the market as almost entirely weather-driven. “This market now is mostly a weather play, and the short-term forecast is not supportive of higher prices,” said a trader with FC Stone Latin America LLC in Miami.

“The short-term forecast looks way above average and even more so in the high-consuming regions of Chicago and the Northeast. Even the eight-14 day forecast isn’t any friendlier. It could be the effects of El Nino making its way into the U.S. and causing a mild winter. We’re hoping for a cold front or something that might stop the effect of El Nino and translate into higher prices.

“Speculators are being influenced by the weather, and if they don’t see any reason to buy it, they are not. The lack of cold temperatures is not warranting any buying activity and without increased demand we could see continued horizontal pricing, which means a lack of consensus.”

Market bears risk becoming complacent. “The risk in this market is to the upside. If we even get a glimpse of weather being colder than average, or if something happens where there is a spike in demand, prices could rally,” the trader said.

Still others go so far as to say the market has discounted a mild winter. “We believe the market has already factored in a mild weather scenario for the remainder of the season so we do not expect a further material downward price correction if weather continues to run mild (just more rolling to $2.15-2.30/MMBtu level),” said Breanne Dougherty, an analyst with Societe Generale in New York. “If weather begins reverting back to normal, which is our base case, we expect a contained price rally. We hold our 2H2016 [Q3=$3.12] vs. 1H2016 [$2.66] constructive price thesis, but March storage exit can jeopardize the extent and timing of that price strengthening. That storage exit, of course, hinges almost entirely on weather.”

Jim Ritterbusch of Ritterbusch and Associates doesn’t buy the discounted winter thesis and senses a market decline. “This week’s main feature, from our vantage point, has been the market’s ability to maintain value at around last Friday’s close despite an extension of warmer than normal temperature views that are now stretching out to about the 18th of this month in most cases.”

“The above-normal temperature expectations are expected to be concentrated within the heavily populated northeast quadrant of the U.S. This reduction in residential demand will be translating to some smaller than usual storage declines that will keep the supply surplus in expansionary mode. This is why we still see a high probability of a drop to about the $2.05 area, possibly next week if the mild forecasts continue. But it should also be noted that the cash market has held up well despite this week’s mild conditions at price levels about 20 cents above last month’s low.”

Gas buyers needing incremental supplies for power generation over the weekend across the ERCOT footprint will have some wind generation to offset gas purchases. WSI Corp. in its Friday morning report said, “High pressure will settle into the south-central U.S. during the majority of the forecast period. This will generally lead to fair weather and near to slightly below average temperatures. Highs will range in the upper 50s, 60s to low 70s. Lows will dip into the 30s and 40s.

“A southerly flow will drive elevated wind generation during the next couple of days. Output is forecast to peak tonight upward of 8-10 GW. Wind gen will relax and become changeable during Sunday into early next week.”

If analysts figures are correct, next week’s storage withdrawal report is likely to be even greater than this week’s 53 Bcf. According to reports, temperatures have been lower, thus precipitating higher gas usage. Preliminary estimates for the week ending Dec. 4 show a range of estimates from a pull of 45 Bcf to as much as 88 Bcf and an average of 61 Bcf, according to Reuters. Last year, 47 Bcf was withdrawn and the five-year pace is 65 Bcf.

In the physical market softer pricing abounded led by the Northeast. Weekend and Monday gas at the Algonquin Citygate skidded 61 cents to $2.14, and deliveries on Iroquois, Waddington shed 13 cents to $2.13. Gas on Tenn Zone 6 200L fell 48 cents to $2.19.

Major hubs showed little price movement. Gas at the Chicago Citygate was unchanged at $2.11, and deliveries to the Henry Hub gave up 3 cents to $2.08. Gas at the PG&E Citygate was flat at $2.60.

The U.S. Department of Labor reported non-farm payrolls increased by 211,000 during November, slightly greater than analyst estimates of 200,000. The figure is not expected to deter the Federal Reserve from raising interest rates, and the unemployment rate held steady at 5%. The Dow Jones Industrial Average gained a stout 370 points.