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NatGas Cash, Futures Ignore Looming TS Nate; November Sheds 6 cents

Natural gas for delivery over the weekend and Monday fell hard in Friday's trading as what is viewed as a well-supplied market proved no match for weakness extending from the Rockies and California to Texas, Louisiana, the Midcontinent, Midwest and Appalachia. The NGI Daily Spot Gas Average retreated 8 cents to $2.50.

Futures responded to continuing weather outlooks featuring warm temperatures and reduced heating load and at the close November had lost 6.0 cents to $2.863 and December was down 5.7 cents to $3.046. November crude oil lost $1.50 to $49.29/bbl.

New England was one of the few spots that showed gains as Monday on-peak power prices moved into positive territory. Intercontinental Exchange reported on-peak Monday power at the ISO New England's Massachusetts Hub rose a stout $13.81 to $46.03/MWh and Monday peak power at the PJM West Terminal added $9.10 to $47.53/MWh.

Gas at the Algonquin Citygate added two cents to $2.68 and deliveries to Iroquois Zone 2 gained 2 cents to $2.82. Gas on Tetco M-3, however, plunged 45 cents to 91 cents and gas headed for New York City on Transco Zone 6 skidded 12 cents to $2.57.

Deliveries to the Chicago Citygate fell 9 cents to $2.70 and packages at the Henry Hub were quoted a penny higher at $2.92. Gas on El Paso Permian fell 7 cents to $2.41 and parcels on Panhandle Eastern changed hands two cents lower at $2.51.

Forecast conditions at some of the weekend's NFL games highlight the moderate nature of prevailing weather patterns.  "Warm, but unsettled weather will be had for the matchup between the Cardinals and Eagles at Lincoln Financial Field in Philadelphia this Sunday," said AccuWeather.com in a report Friday

"Along with clouds and some sunshine, temperatures will rise from the mid-70s prior to the game to near 80 at kickoff. With some moisture around, there could be a shower or two throughout the game, but any rain should be fairly light and short-lived. Still, it could make for some wet field conditions.”

Farther north “warmth and humidity will prevail at MetLife Stadium in New York as the Giants host the Chargers. Temperatures will be in the mid- to upper-70s just prior to the game, near 80 at kickoff and into the low 80s by the second half. Temperatures will be about 10 degrees Fahrenheit above normal for early October,” the forecaster said. “A shower cannot be ruled out for the game, but the chance for rain at any given point is fairly low. If it does rain, it should be fairly light and short in duration.”

Out West gas at Opal fell 6 cents to $2.53 and Kern Delivery came in at $2.64, down 5 cents. Gas at the PG&E Citygate was off 7 cents to $3.09, gas priced at the SoCal Citygate was seen 15 cents lower at $2.91.

"We'll have to see how this market plays out next week. We may see prices down in the $2.70s," a New York floor trader told NGI. "We are still in that $2.75 to $3.25 trading range.

Analysts are now focusing on the bullish aspects of a market with storage now less than the five-year average. "The 42 Bcf hike was about 8-9 Bcf less than the average street forecast and 17 Bcf below our expectation," said Jim Ritterbusch of Ritterbusch and Associates in comments Friday. "As a result, the long standing surplus against five year average levels flipped to a small deficit of 8 Bcf with a further moderate stretch in the deficit expected with next week's [Energy Information Administration] report. This newfound deficit is being shrugged off by the market for now given mild temperature forecasts that are stretching through the next couple of weeks with an elevated pace of production also restricting buying interest. But, this deficit is providing no margin for any unplanned supply disruptions or demand spikes.

"And with storage only slightly above the 3.5 Tcf level, achievement of our expected 3.85 Tcf peak now appears out of reach. The money managers appeared comfortable in setting on a significant net short position for now with the weather factor diminished but we feel that an inevitable close back to above $3 will force a large amount of fund short covering in setting the stage for a more significant price rally that could easily carry up to the $3.20-3.25 zone should the weather forecasts turn cold later this month. But, we also advise raising stop protection to below the $2.88 level on a close only basis."

Hurricanes Harvey, Irma, and Maria left the market virtually unscathed price wise, but brewing storm Nate is headed directly for the heart of Gulf of Mexico (GOM) production infrastructure.

Tropical Storm Nate, gaining steam as it headed north toward an expected landing on the northern Gulf Coast, had by Friday midday reduced natural gas production from the offshore by more than half to a multi-year low about 1.713 Bcf/d.

Exploration and production companies and pipeline operators in Nate's path were evacuating personnel and shutting in operations in the GOM, while natural gas processing facilities in Louisiana were suspending operations.

In its 4 p.m. CDT update Friday, the National Hurricane Center said the center of Nate was 80 miles east of Cozumel, Mexico moving toward the north-northwest near 21 mph. Winds were up to 60 mph. That motion was expected to continue, with a turn toward the north/northeast Saturday night and into Sunday. On the forecast track, Nate was expected to move "near or over" the northern Gulf Coast Saturday night or Sunday as a hurricane.

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