Prices resumed a mostly moderate climb Monday after having last week’s four-day series of spikes interrupted Friday. Although cold weather was easing a bit after setting date-specific records for low temperatures over the weekend, there was still quite a bit of chill in northern forecasts to keep heating load fairly strong.

Monday’s overall cash increases were able to overcome negative guidance from the previous Friday’s 19.3-cent downturn by November futures, getting a little extra boost from the restoration of industrial load after its typical weekend decline (although Monday technically was the Columbus Day holiday, it is not widely observed as a day off for many workers). The 11-cent rally Monday by the prompt-month futures contract (see related story) may help sustain the cash rebound for a while longer.

Quotes ranging from flat to a little more than 30 cents higher tended to record their largest gains in the Midwest and Northeast, where Tuesday’s low forecasts were dipping into the 30s at many locations, and in Northern California, where PG&E had ended a systemwide high-inventory OFO Sunday (see Transportation Notes). A couple of points saw drops of about 2 cents, but an Overage Alert Day by Florida Gas Transmission due to predictions of market-area heat (see Transportation Notes) failed to prevent the Florida citygate from seeing the day’s biggest loss by far, although production-area numbers into Florida Gas were up by about a nickel to a dime or so.

Texas and the New Orleans area were starting to rejoin the desert Southwest with highs in the 80s, but other than there and Florida cooling load was fairly scarce. Much of the South wasn’t due to get above the 70s, and despite slight warming trends in the Northeast and to a lesser degree in the Midwest, chilly to very cold weather will remain the norm in Canada and most of the northern U.S. this week.

Dominion said its working gas storage inventory stood at 289 Bcf as of last Thursday, compared with 276 Bcf on Oct. 9, 2008 and 285 Bcf on Oct. 11, 2007.

A Midwest marketer said her area can expect conditions to remain cold through early next week, but then temperatures should begin turning warmer again. Her company currently is buying spot gas for only one customer now, she said. It encouraged clients to stock up on gas at the beginning of the month when prices were lower, which turned out to be a good move considering the four straight days of big increases last week, she said.

The National Weather Service predicts below-normal temperatures during the Oct. 17-21 period throughout the eastern U.S. east of a line extending southward from the eastern Dakotas through central Texas. It looks for above-normal readings everywhere west of a line running northward from central New Mexico and eastern Colorado, encompassing most of Wyoming before curving to the northwest into western Montana.

The recovery in drilling rigs actively searching for natural gas in the U.S. accelerated during the week ending Oct. 9, jumping by 14 to 726, according to the Baker Hughes Rotary Rig Count. It saw no change in the Gulf of Mexico, saying all of the increase occurred onshore. The latest tally is up 4% from a month ago, Baker Hughes said, but down 53% from the year-earlier level.

Barclays Capital analysts noted that the gas-directed rig count had risen for the past 11 out of 12 weeks, adding that if sustained, “this pace of growth in drilling would jeopardize further tightening of the [supply-demand] balances. Price signals are of paramount importance in pacing supply and demand, but the efficiency gains in drilling along with falling costs and a shift to the most prolific shale plays are obscuring the price levels necessary to steer the rig count at the right pace. Against this backdrop, a trial-and-error period might be ahead of us while price gyrations find their way to a middle ground.”

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