Physical natural gas for weekend and Monday deliveries fell nearly 8 cents Friday as traders were reluctant to make purchases given the large amount of gas available and limited demand in a number of areas.

Rockies and Northeast points were particularly hard hit. At the close of trading the November contract had fallen 3.4 cents to $3.400 and December had dropped 5.7 cents to $3.724. December crude oil added 23 cents to $86.28/bbl.

“There’s lots of gas and not a lot of demand on the weekends. Algonquin traded 20 cents under Dawn Friday,” said a Northeast marketer. “I think everyone is loaded for a cold winter, and if it’s not cold in November, prices could be terrible. There is still room at Dawn to inject, but every place else if you don’t burn it, there is no place to put it. I don’t believe there is a lot of storage on Algonquin, or it must be full. There’s just a ton of gas out there.

“If prices get weak, users at Dawn will just roll their storage into summer, but places like Algonquin where if the gas just lands there and you don’t have the storage, you could see Tennessee and Algonquin pretty weak relative to the Hub. There is lots of flexibility at Dawn that you don’t have at the other spots.”

Temperatures at major cities were expected to ease from Friday’s above-normal readings closer to seasonal averages by Monday. AccuWeather.com reported that the high in Boston Friday of 66 was expected to ease to 58 on Sunday and 60 on Monday. The normal high in Boston at this time of year is 58. New York City’s Friday high of 68 was anticipated to ease to 59 on Sunday and 59 on Monday. The seasonal high in New York is 61.

Quotes on Algonquin Citygate for weekend and Monday gas averaged $3.64, down 25 cents, and on Iroquois Waddington deliveries slipped 21 cents to $3.79. Weekend and Monday gas on Tennessee Zone 6 200 L shed 24 cents to $3.74. At Dawn weekend and Monday deliveries fell 2 cents to $3.74.

Farther south, gas on Dominion averaged $3.40, or 2 cents lower, and deliveries to Tetco M-3 fell 15 cents to $3.44. Buyers on Transco Zone 6 New York found themselves paying 11 cents less, also at $3.44.

Traders were unsure what the market impact of a Dominion expansion from West Virginia and southwest Pennsylvania to the north and east would be. “There’s probably just a handful of people on Dominion that can utilize the expansion, and it just becomes a function of who signed up for it,” said an eastern marketer.

“Dominion is a spread-out pipeline. It goes into New York, Maryland, and it’s in Ohio and Pennsylvania, kind of all over the place. And now it is reaching down into West Virginia and grabbing gas out of western Pennsylvania as well. It depends on how much capacity is remaining on their system, but the expansion is 484,000 Dth/d, not huge, but sizeable. It looks like you will have more gas going into Texas Eastern at the Oakford interconnect.”

Rockies prices for weekend and Monday deliveries also took a dive. Gas at the Cheyenne Hub dropped 9 cents to $3.39, and CIG Mainline eased by 10 cents to $3.36. On Northwest Pipeline Wyoming parcels dropped 9 cents to $3.41, and at Opal weekend and Monday gas fell 8 cents to $3.43. Deliveries to Questar were 3 cents lower at $3.32, and gas into Malin shed 9 cents to $3.48.

Futures traders are backing off a bullish stance, for the moment. “We’re suggesting a move to the sidelines for now and will reassess near term pricing strategies in the light of weekend updates to the temperature views and hurricane Sandy,” said Jim Ritterbusch of Ritterbusch and Associates. “However, as a longer posture, we prefer the long side of the market. The front switch [November December] stabilized [Friday] as the process of rolling longs forward out of the November contract appears to have been completed. [This] week’s trade will hinge to a large degree on pre-expiration positioning out of the November contract, a development that will be heavily influenced by weekend updates to the one- to two-week weather forecasts.”

Ritterbusch sees a weather dynamic where momentum seems to be “shifting toward more seasonal Midwest temperatures; the market will still need to discount some significant downsizing in storage data to be released at the beginning of November,” he said in closing comments to clients.

Near-term weather outlooks show a cool East and warm West. WSI Corp. of Andover, MA, in its six- to 10-day outlook shows below- to much below-normal temperatures east of the Mississippi and above-normal temperatures west. “[Friday’s] forecast is warmer than yesterday’s outlook in much of the north-central U.S.; however, there are few other significant changes.

“Temperatures could still run cooler than forecast across the East Coast while warmer over the interior West, especially mid-late next week. The axis of a deep trough is anticipated over the Atlantic Seaboard in the wake of Hurricane Sandy, while mean ridging should dominate much of the West. Confidence is near to above average in the six-10 day outlook. There is good ensemble model agreement with a few technical differences.

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