Keeping with the flip-flop trend of the week, a large majority of natural gas cash points on Wednesday reversed course from Tuesday and recorded gains of up to a half dollar. While the East, West Coast and onshore Gulf of Mexico area posted gains across the board, the Midcontinent saw a few declines mixed in with widespread gains. The Rockies had basically equal gains and losses.

If the week’s three-day history of gains, drops and then gains is a predictor, cash points will likely be lower for the most part on Thursday. The futures market might aid in that prediction as the November contract sheared 6.7 cents on Wednesday to close at $6.777, down just more than 15 cents from where the Henry Hub averaged on the day.

The eastern half of the country was dealing with some real cold Wednesday after some northern spots saw their first snow Tuesday night.

“We are buying a little extra gas due to the recent arrival of colder weather,” said a northeastern utility trader. “However, it appears milder temps are just ahead, so we’ll likely go back to the original plan then. Prices were basically up 20 cents on the day in the Northeast, which is likely a little extra demand as a result of the chill.”

An influx of cold in the eastern half of the United States sparked a small increase in demand, but buyers and sellers alike appeared fairly comfortable with the natural gas storage situation. The industry has injected an unseasonably high amount of gas into underground storage over the last couple of weeks, leaving stocks at 3,277 Bcf as of Oct. 10. Over the last three reports, the industry has seen injections of 87 Bcf, 88 Bcf and 79 Bcf, whereas the five-year average builds for those weeks are 72 Bcf, 69 Bcf and 63 Bcf, respectively. Heading into Thursday’s report for the week ended Oct. 17, another large injection is expected with industry estimates mostly ranging between a build of 75 Bcf and 85 Bcf.

The northeastern utility trader said his company’s storage “was pretty much full” at this point. “All we are doing right now is tinkering with how much to buy in order to hit our target, but we are basically there,” he told NGI. “The two hurricanes we saw last month really did not make much of an impact on the process of getting gas into the ground. We have been having some pretty large injections the last couple of weeks. Maybe prices will come off if we get a strong storage injection number in the Energy Information Administration’s [EIA] report Thursday morning for the week ended Oct. 17, but you never know.”

Others agreed that price is currently a question of winter temperatures and storage twists and turns. “Prices seem pretty content where they are right now,” said a New York trader. “We’ll have to see what temperatures do going into the winter, but we have an awful lot of gas in storage, so there is certainly a cushion. It looks like people are looking for another injection in the area of 80 Bcf to be revealed in Thursday morning’s report. If that turns out to be true, then we are continuing to move in on last year’s record season-ending levels.

Barclays Capital analyst George Hopley noted that with the injection season quickly nearing its end, natural gas markets are turning attention to the outlook for winter balances as “a leading indicator” to where prices might lead. In a research note, he pointed out that the latest monthly statistics from the EIA showed continued production growth of 4.9 Bcf/d in July, bringing the year-to-date average to 4.4 Bcf/d.

“While market fundamentals are certainly looser than last year and, at present, shoulder season balances provide little support, we believe winter prices are now near their lows,” Hopley said. “The November through March price strip has lost nearly 50% from its mid-summer highs and is down 11% since the beginning of September.”

Taking a closer look at Thursday’s storage report, a Reuters survey of 22 industry players produced an injection range of 66 Bcf to 85 Bcf with an average build expectation of 76 Bcf. The actual injection will be compared to last year’s 60 Bcf injection for the week and a five-year average build of 62 Bcf.

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