Aided by prior-day futures weakness, cash points on Thursday continued the week’s trend of back and forth by recording drops across the country. While most regions saw decreases of 20 to 45 cents, some eastern delivery points dropped on Thursday by over 60 cents.

The East Coast value plunges occurred despite colder temperatures permeating much of the eastern half of the United States. The Midcontinent region dropped as much as 40 cents or so on the day. On the West Coast and in the Rockies cash points mostly declined by less than 40 cents, but a few locations approached half-dollar losses.

With dominant market gains on Monday and Wednesday and prevalent pullbacks on Tuesday and Thursday, the trend would seem to point toward widespread gains on Friday if futures market action can be ignored. In one of its strongest sessions of the last few weeks (see related story), November natural gas futures trimmed 35.8 cents on Thursday to close at $6.419, despite the fact that the storage report revealed a smaller-than-expected injection.

While the industry had been expecting an injection between 75 Bcf and 85 Bcf for the week ended Oct. 17, the Energy Information Administration reported Thursday morning that only 70 Bcf was put underground for the week. The number was bullish compared to expectations, but bearish when compared to historical data. A 60 Bcf injection was recorded for the similar week last year and the five-year average build for the week is 62 Bcf.

With two reports left in the traditional injection season, working gas in underground storage stands at a healthy 3,347 Bcf, which is just 77 Bcf less than last year’s level at the same time. At the end of the 2007 injection season, the 3,545 Bcf in storage was an all-time record season ending level.

Barclays Capital analyst Biliana Pehlivanova laid out the different storage scenarios. “U.S. natural gas markets are looking to winter balances and the outlook for prices,” the analyst said in a research note. “With the injection season quickly nearing its end, we expect U.S. inventories to finish October with 3.47 Tcf in the ground. What comes thereon will depend on several factors, chief among them the weather. An analysis of past withdrawal seasons and their sensitivity to weather trends shows that a 7% colder-than-normal winter would result in a cumulative draw of 2.2 Tcf over the course of the season, while a season with 7% warmer-than-normal temperatures would prompt a 1.3 Tcf call on gas from storage. If weather follows the 10-year normal trend, we expect to see 1.8 Tcf withdrawn by the end of March, leaving 1.7 Tcf in the ground at the onset of the 2009 injection season.”

Much has been made of the recent temperature drop in the eastern half of the country, but some expect it to be short lived.

“Ready or not, cold weather is on its way. A dip in the jet stream will throw some arctic air southward out of Canada,” said Katie Storbeck, a meteorologist with “It will send the chilly air plunging into the Plains and Midwest this weekend and into the East by early next week. Temperatures may drop as low as 10 to 15 degrees below normal, while winds howl with gusts over 40 mph.”

However, the National Weather Service (NWS) said the cold snap may clear out of all areas but the Northeast by the end of October. In its eight- to 14-day forecast covering Oct. 31 till Nov. 6, the NWS sees most of the western two-thirds of the country as exhibiting above-normal temperatures with the Mid-Atlantic region showing normal readings and the Northeast recording below-normal conditions.

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