Downward momentum from Thursday’s weakness bled into the overnight trading session as December natural gas futures plunged into the $6.70s and $6.80s in early Friday morning trade and maintained that price level for the entire regular session. Prompt-month natural gas ended up closing at $6.757, down 22.2 cents from Thursday but only 2.6 cents lower than the previous week’s finish.

“We really did not see a whole lot going on in natural gas, much less the rest of the energy commodities,” said a Washington, DC-based broker. “Natural gas sold off in the morning and then was flat on the day. Across the energies, everything ended up a little higher or a little lower. The stock market has been wishy-washy as well. It just seems the entire financial system is saying ‘not sure,’ so traders are pushing it around a little bit but nobody is really doing anything real.”

The broker said natural gas futures are simply range trading. “We have been bouncing back and forth between $7.250 and $6.250, so it seems like a pretty comfortable range for this market,” he added. “As far as strategies go in this type of market, it is always a question of whether you try to trade the range or play the breakouts. This tends to make the breakout plays explosive. Let’s say someone is trying to sell the top and buy the bottom and the market moves higher. You then get a combination of somebody trying to cover their short at the high of the range and someone else buying the breakout, so you get double the buying.

“It really depends which of the poisons you prefer. Would you rather do nothing and wait to try to buy a breakout, or sit there and try to pick up nickels and dimes back and forth in the range? A dollar is not much of a range though, because if you are wrong by 15 to 20 cents, there goes most of your profits.”

Natural gas bulls found out Thursday just how important broader financial and economic issues are. The Energy Information Administration reported a supportive 12 Bcf injection to working gas inventories, well below expectations and historical data. By the 10:35 a.m. EST release of the data, though, December futures had already fallen 20 cents. Another Washington, DC-based broker characterized Thursday’s 27-cent drop in December futures as a “crude oil phenomenon.” The weakness in crude oil is derived from “an expansion of the doom and gloom mindset in terms of what we may see on the unemployment numbers Friday. We are still in a strong dollar/weak energy mode,” he said.

Some saw the slim injection as possibly reflecting intentional production cutbacks. “[Thursday’s] smaller-than-expected storage injection could also be indicating some discretionary onshore production curtailments that could provide a significant offset to some expected industrial demand slippage in response to the weakening economic environment,” said Jim Ritterbusch of Ritterbusch and Associates.

The Labor Department reported Friday morning an unemployment rate of 6.5%, higher than the 6.3% expected by a Bloomberg survey of 78 economists, and up from 6.1% in September. Nonfarm payrolls dropped 240,000 during October, much more than the 210,000 expected.

Hurricane Paloma remains a long shot to affect Gulf of Mexico energy infrastructure or U.S. land. According to AccuWeather.com meteorologist John Kocet, Paloma, with winds as strong as 100 mph, was taking dead aim at Cuba and was expected to wreak havoc on the island over the weekend. “The torrential rainfall will cause life-threatening flash floods and mudslides” in Cuba, Kocet said, noting that “this hurricane will have no direct impact on the United States mainland.”

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