Continuing the wild back and forth trading from one week to the next, December natural gas futures on Friday traded between $3.975 and $4.175 before closing at $4.164, up 15.7 cents from Thursday and 36.5 cents higher than the previous week's finish.

Despite the weekly price swings, the prompt-month contract still remains comfortably rangebound within the $3.500 to $4.500 area. Some market watchers believe the breakout risk is still heavily weighted to the upside, noting that cold will be the trigger.

"It's going to be pretty difficult to dislodge this market from the comfort zone it has carved out over the last few weeks," said a New York trader. "However, once 'real' cold comes to town, I think some of this extra gas could be sucked up pretty quickly. Yes, we're currently at an all-time record for gas in storage at 3,843 Bcf, but we'll see how quickly that declines once the mercury drops."

Natural gas bulls might have been impressed with the news from Baker Hughes Friday that gas rigs operating in the United States dropped by 19 to 936 for the week through Nov. 19. Oil and gas horizontal rigs, which are normally used in onshore shale development, also fell by eight to 932.

However, one Washington, DC-based broker said he's not so sure that the relatively low gas prices will back drilling off as much as some people expect. "The market is currently attempting to digest and process the value producers are getting out of all of the molecules coming out of a well," he told NGI. "With the values of the NGLs [natural gas liquids], the situation is not as bleak as it looks. Some of the NGL values are still very rich, so producers are hesitant to lay down rigs. It's a lot like 2008 with the refiners. They were making so much on diesel fuel that they could care less what they made on gasoline.

"Some of the talking heads are making a commotion about how prices are so low, producers need to be shutting in wells. But let's take a look at what they're netting out of each well. Yes, $3.20 or $3.50 on gas sucks, but they're getting a nice return on butane, on propane and on ethane, and there is a high demand for those liquids. The economics are not black and white [see Daily GPI, Oct. 27]."

Weather bulls are loaded for bear. Forecasts call for much-below-normal temperatures in the coming week. WSI Corp. of Andover, MA, in its six- to 10-day forecast said, "With the exception of the northern Plains and portions of the West, below and much-below-normal temperatures are forecast over most of the country. Anomalies are expected to average between two to nine degrees below normal in most locations."

WSI acknowledged that there are risks to the forecast and suggested that "over the period temperatures may continue to trend warmer in the West and colder over most locations south and east of Chicago than currently forecast. Medium-range models all advertise the focus of the troughing cold weather will shift into the eastern U.S. late [in the] week while a building ridge in the West brings milder readings to the western U.S."

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