In spite of another prior-day futures decline, the cash market found enough cold weather in the forecast to justify increases at most locations Thursday.

Drops of 2-3 cents to about 15 cents, led once again by the Florida citygate, at several scattered points kept mixed price movement in play. Otherwise, gains were mostly in single digits as they ranged from 2-3 cents to nearly 20 cents. The Midwest and Northeast — the most densely populated regions where lows in the 30s will continue to reign for a while longer, saw most of the largest upticks.

The Energy Information Administration’s report of a 58 Bcf storage injection for the week ending Oct. 9 handily exceeded consensus expectations in the low 50s Bcf. But despite the seeming bearishness of the report, the volume’s shortfall from year-ago and five-year average builds (81 Bcf and 64 Bcf, respectively) combined with predictions of cold weather extending into the weekend in several regions likely were all Nymex traders needed to push November futures 4.6 cents higher (see related story). Strength in the petroleum-based contracts may have also been a booster in the natural gas screen run-up.

Although any potential additions to heating load would be meager at most, after peaking on either side of 90 Thursday the southern sections of Texas and Louisiana are due join the rest of the South (excluding Florida) with highs in the 70s Friday as a cold front completes its occupation of most of the region.

Meanwhile, warming trends in the desert Southwest, interior California and Western Canada contrasted with lows rarely expected to get above the 30s from the Rockies through the Northeast and Eastern Canada. Two storms will bring possibly historic early-season snow plus rain and wind to the Northeast from Friday morning through the weekend, The Weather Channel said.

One source noted that it may be too early to count the desert Southwest out of very hot weather for the rest of 2009. While Phoenix was still limited to highs in the mid to high 80s from Monday through Wednesday, Thursday it was expected to peak in the mid 90s and reach a high of 98 Friday, according to Weather Central.

As an indication of growing heating load in the Northeast, Columbia Gas volumes traded on IntercontinentalExchange made a huge jump from 1,083,100 MMBtu Wednesday to 1,490,700 MMBtu Thursday.

Although it may seem like it to some, winter hasn’t really arrived yet, said a utility buyer in the Lower Midwest. The current cold snap, with overnight lows around freezing, should be ending during the weekend, he said. But local temperatures recently have been 15-20 degrees below normal, which “has been great for gas sales this week,” he added.

The utility should see a drop in throughput next week, the buyer went on, but a partial compensating factor is that it won’t have to buy as much spot gas as before while prices have mostly been rising in last two weeks. The area experienced five to six inches of snow last Sunday, but conditions should be normal for the foreseeable future after this coming Sunday, he said.

Barclays Capital analysts noted Thursday that a “wave of optimism has overcome the natural gas market as the injection season nears its end,” adding that the steady climb in active gas rigs for the past several weeks is a signal “that the drilling bottom is behind us.” The Baker Hughes survey puts the trough at 665 rigs in mid-July, while Smith Stats pegged the minimum count at 672 then, the Barclays advisory said. According to Baker Hughes, the rig count has grown in 11 out of the past 12 weeks, with the past week “marking a particularly steep jump of 14 rigs to 726.” Smith Stats has shown a less consistent but steeper recovery, recording an addition last week of 25 rigs to 739, the analysts said. “The discrepancy in the number of rigs drilling for gas between the two surveys is less important than the consistent direction of the trend, as there is now little doubt that drilling is on a rebound.”

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