Physical natural gas prices overall added another penny on average with strength noted in the Midwest and some eastern locations. California points eased as temperatures were expected to moderate through the week, giving the area a break from a fall heat wave.

At the close of futures trading November had added another 5.1 cents to $3.531 to set another 2012 record high for a spot contract, and December had gained 1.7 cents to $3.769. November crude oil eased 59 cents to $91.89/bbl.

Midwest buyers were busily locking in winter supplies. “We were pleased with our RFPs for winter supply. We were able to get index “minus,” so it ended up being pretty good. We got some good bids, so whenever you can get index “minus” that’s pretty good. We use either Demarc or Northern Natural Ventura as an index,” a Midwest buyer said.

“Interest was broad and we had a good selection of pricing. We like to hedge about 40% of our supply so going into the winter with that kind of mix we should be OK. Our load is primarily residential heating load, and we have a pretty good base, but our summer loads are around 30,000 Dth/d, and we can go up to 300,000 Dth/d in the winter. We’re not a big industrial or commercial center at all.”

The buyer said he had gone into October “not too heavy on index purchases of gas, since we bought more than we needed at September index. We went in a little light so we wouldn’t be swimming in gas all the time. Prices have made a nice little turnaround, but we still have to fill storage and we are working on that.”

Filling storage just got a little more costly Wednesday. Deliveries to Northern Natural Gas Ventura added 6 cents to $3.20, and quotes at Demarcation were 5 cents higher at $3.21. At the Chicago Citygate Wednesday gas added 2 cents to $3.26; Consumers was up a penny at $3.30, and Michcon was up a penny at $3.29.

Next-day gas in California eased as forecasts called for a modest break in the heat wave baking southern portions of the state. AccuWeather.com predicted Tuesday’s high in Los Angeles of 92 would slip to 86 Wednesday and 83 Thursday. The normal high in Los Angeles at this time of year is 81. San Francisco’s Tuesday high of 86 was expected to slide to 70 Wednesday and 68 Thursday. The seasonal high in San Francisco is 73.

The National Weather Service (NWS) in Los Angeles said, “As the high pressure slowly moves east and onshore flow returns…a cooling trend will begin tonight through the end of the week. Near or slightly below normal temperatures are expected this weekend as low pressure remains over the east Pacific.”

Quotes at Malin were up a penny, but next-day gas at PG&E Citygate averaged 1 cent lower at $3.88. At the SoCal Border Wednesday deliveries were 4 cents lower at $3.57, and SoCal Citygate came in 4 cents lower at $3.69. Gas on El Paso S Mainline was down 6 cents at $3.59.

Northeast and east points were mixed. In the Northeast, Algonquin Citygate quotes averaged 6 cents lower at $3.54, and deliveries to Iroquois Waddington were 2 cents higher at $3.69. On Tennessee Zone 6 200 L next-day gas was 4 cents lower at $3.52.

Dominion deliveries averaged up a cent at $3.17, and at Tetco M-3 next-day gas came up a cent as well to $3.40. Gas flowing Wednesday into Transco Zone 6 New York also added a penny to average $3.38 for Wednesday delivery.

Futures continue to chart new territory to the upside, and floor traders have a hard time putting the pencil to specific technical resistance points. “It’s been so long since we have been this high, no one is talking any resistance at all,” said a New York floor trader.

The November high Tuesday of $3.546 is the highest a spot futures contract has traded since early December 2011 when the January contract reached $3.550.

“I don’t think I would be picking resistance at this point. I think the market is pretty short, and right now people are throwing out outlandish numbers of where they think the market can go. This market has been leaning so short for so long, you can get one of these giant moves to the upside without any good reason at all,” he said.

Technical analysts, however, see resistance ahead in the form of certain chart patterns and suggest that bulls tread cautiously. However, conditions still remain in place for an advance of another 10-30 cents. “In head and shoulders terms, our next objective is the $3.607-3.660-3.690 zone. In wave count terms, our next objective is the $3.583-3.631 zone. In terms of ratio retracements and moving averages, our next objective is $3.806-3.897,” said Brian LaRose, a technical analyst with United ICAP, following Monday’s meteoric 16-cent advance. He noted that the daily relative strength indicator was pushing into overbought territory and said, “we strongly suggest the bulls proceed with extreme caution into any new highs from here.”

Weather forecasts are calling for below-normal temperatures, but in the near term heating and cooling requirements in major energy markets are expected to be below historical norms. AccuWeather.com, for example, in its six- to 10-day outlook shows below-normal temperatures north of an arc extending from Utah to Louisiana to Virginia.

In its most recent forecast, the National Weather Service (NWS) shows below-normal accumulations of both heating degree days (HDD) and cooling degree days (CDD) in dominant eastern and Midwest markets. For the week ended Oct. 6, NWS forecasts New England will see only 33 HDD, or 42 fewer than normal; and the Mid-Atlantic states of New York, New Jersey and Pennsylvania will have just 21 HDD, or 39 fewer than normal. The Midwest from Ohio to Wisconsin is expected to receive 54 HDD, or eight fewer than its normal seasonal tally. Cooling requirements are almost nil. New England is anticipated to see three CDD, or three more than normal; and the forecast for the Mid-Atlantic is for nine CDD, or six more than its early-October average. The Midwest is predicted to be the recipient of no CDD or four fewer than its seasonal tally.

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