The cash market outpaced futures and overall gained an average of 6 cents in Friday’s trading for Oct.1 gas. Traders wrapped up September deals on Thursday, but most Eastern and Midwest points made solid gains as cold weather started to creep into near-term forecasts, and Gulf points rose as traders cited end-of-month balancing.

At the close of futures trading November was up 2.3 cents to $3.320 and December had added 4.0 cents to $3.615. November crude oil rose 34 cents to $92.19/bbl.

Gulf traders focused on the Florida market were surprised by the hefty gains posted on Florida Gas Transmission (FGT) Zone 3. Earlier, FGT had been conducting maintenance, and it was difficult to move gas past Zone 2. At present, however, maintenance is complete with no interruptions. “It’s strange. There is no maintenance and there are no allocations, yet FGT is trading about 32 cents over the Hub, and the usual basis is closer to 15 cents. The one thing that comes to mind is end-of-month balancing, and traders may be buying just to square accounts by the end of September,” said a Florida utility buyer.

Gulf locations for Monday deals rose across the board. FGT Z3 added 8 cents to average $3.40, and deliveries to Transco Zone 3 added 3 cents to $3.03. At the Henry Hub Oct.1 gas was quoted at $3.08, up 7 cents, and deliveries to Tetco E LA added 3 cents to $3.00. Deliveries on Tennessee 500 L were up by a nickel to $3.06, and gas on ANR SE rose 3 cents to $2.99.

Monday gas in the Midwest was also firm as October maintenance on NGPL into Chicago Citygate was expected to result in increased volatility.

A Midwest analyst reported that the maintenance was requiring companies to buy gas into NIPSCO at ANR and Vector, both at a location called Crown Point. He noted that this gas is trading at +25- to +30-cent basis, while the NIPSCO basis is normally lower than that, +15 to +20 cents. “[P]eople have known about it for a couple of months, but it will still likely cause some volatility around the Chicago index for October.” He also noted that Alliance will be down for the first five days of October and volumes there will be zero.

That volatility was in play for Monday gas. Chicago Citygate deliveries had a high of $3.34 and a low of $3.06 to finish at $3.20, up 9 cents. Michcon was quoted at $3.18, up 6 cents, and Consumers came in at $3.17, up 6 cents. No trades were posted on Alliance.

At eastern points Monday gas was also higher as buyers braced for some wacky weather over the weekend. AccuWeather.com meteorologist Alex Sosnowski predicted that “a pocket of chilly air [would] rotate southward over the Great Lakes and central Appalachians [last] weekend, leading to atmospheric chaos. The air originating from central Canada will reach across southern Ontario, Michigan, northern Indiana, northern Ohio, northwestern Pennsylvania and western and central upstate New York.

“As the cold air passes over the waters of the Great Lakes the atmosphere will pick up a little warmth but will also become very unstable. The result will be angry clouds, cold showers of rain and hail, as well as brief, gusty thunderstorms. If the air were about 5 to 10 degrees colder, we would be looking at snow showers all over the place.”

Deliveries Monday to Tetco M-3 added 9 cents to $3.19, and gas into Transco Zone 6 New York rose 9 cents to $3.19. Dominion was quoted at $3.05, up 3 cents.

Spot futures Friday posted the highest trade of 2012 at $3.330, and near-term technical indicators show the market stretched to the upside. The 800-pound gorilla sitting on trading desks is the question of winter weather. In late September it is a huge unknown, and traders are trying to get their heads around winter weather and what kind of demand is likely for the next six months. It wouldn’t be unusual for the market to add more risk premium (higher prices) to account for this uncertainty.

Market technicians wonder if the market has come too far too fast. “Breaking out or about to break down?” queried Brian LaRose, a market technician at United ICAP. “While natgas was able to take out the spot continuation high at $3.277, it did not do so decisively. The November contract has ground to a halt right into $3.316-3.332 resistance. The short term RSI [relative strength indicator] readings are still in dangerously overbought territory, not exactly encouraging signs. [I] suspect a correction is needed before this advance can continue.”

Traders and marketers short the market will be taking a close look at the near-term weather outlook. WSI Corp. of Andover, MA, predicts an incursion of cooler temperatures into the northern tier of states during the six- to 10-day period. This is something of a change from Thursday’s outlook. “[Friday’s] forecast is cooler over most of the country than it was yesterday.” Below-normal temperatures are now forecast over the northern Plains for the balance of the period. WSI added that the large-scale weather models were in good agreement.

“The risk to the forecast is now to the warmer side over the interior West and the colder side over most of the rest of the country. All models feature a strengthening positive PNA[Pacific North American pattern]/EPO [Eastern Pacific Oscillation] pattern over North America late next week,” the forecaster said in a morning note to clients.

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