Last week’s sole rally on Thursday proved to be short-lived as a bearish mood returned to the market Friday. Most points fell anywhere from 2-3 cents to half a dollar Friday as a prior-day gain of 21.6 cents by November futures proved no match for weekend warming trends in the South and Northeast and the usual decline of industrial load over a weekend in vying for cash price influence.

Several instances of flat to as much as a quarter higher numbers, primarily in the Rockies/Pacific Northwest region, kept mixed price movement in play. Forecasts of lows on either side of the freezing level in Western Canada, the Rockies and Upper Plains/Upper Midwest areas along the Canadian border constituted the only remaining sources of substantial heating load for gas.

There is a good chance of growing heating load in the East during the coming week as Lehman Brothers meteorologist Daniel Guertin said a “cooler and drier pattern” will be developing in the region. However, he expected hot and dry weather to remain in place across the West through the six- to 10-day period from last Friday. Guertin also downplayed any potential for offshore production interruptions from a “weak area of low pressure” in the northeastern Caribbean Sea. “Some slow development of this system is possible over the next few days as it heads in the general direction of Central America,” he said. “However, water temperatures are falling in the Gulf of Mexico and strong upper-level winds are in place across much of the Gulf, so this system should not be a threat to the energy-producing regions…”

After defying the odds by rising Thursday in the face of dual high-linepack OFOs issued by PG&E and SoCalGas, the PG&E citygate and the Southern California citygate were down a couple of pennies and about half a dollar, respectively, Friday as both utilities extended their OFOs through at least Saturday.

Although generally moderate weather kept the market soft for most of last week, a Gulf Coast producer sees the possibility of firmer pricing ahead. Following a moderate weekend with Boston and New York City highs in the low 70s, the Northeast market area should be getting colder early this week, he said, and the boost in heating load may help rally the cash market.

November bidweek trading has been slow so far, the producer said, which he thought was largely due to many utilities starting winter term contracts Nov. 1 and sitting on full or near-full storage accounts because of mostly mild October weather. Referring to a utility buyer in the South who said last week’s cold weather had allowed his company to withdraw a little gas from previously full storage accounts (see Daily GPI, Oct. 26), the producer said such utilities would be wise to preserve any “wiggle room” they can get in storage. They can always go into the November daily market if the need arises, he said.

He reported November basis for Texas Eastern-South Texas of minus 41-37 cents, saying the numbers got weaker as Friday went on. He also said he traded Columbia Gulf-mainline at basis of minus 8 cents. He was seeing small premiums on index-based deals of index plus 0.25-0.5 cent in the Gulf Coast, but said Columbia Gas in Appalachia traded at index plus a penny.

A utility buyer in Florida said he picked up Florida Gas Zone 1 packages at a basis range of minus 18-10 cents, adding that such a wide range was not unusual for Zone 1. He also reported Florida Gas Zone 2 basis purchases at flat to plus 0.75 cent, although he had seen offers at up to plus 2.5 cents. He didn’t do it himself, but the buyer said he had seen Florida Gas Zone 3 trade at plus 20 cents, with offers going as low as plus 7 cents. His company pretty much sticks to basis deals only during bidweek, he said.

Florida had a mild weather forecast for the weekend, the buyer continued, and similar conditions are expected to last into early November. He said he finished November baseload trading Friday and will not make any further purchases this week “unless somebody drops a great deal in my lap that I just can’t refuse.”

An industrial end-user said he had a lot of paperwork and “too much going on” in the daily market to get any bidweek business done yet. He will make November baseload purchases this week.

Citigroup analyst Tim Evans made an early projection of 60 Bcf and 25 Bcf storage additions for the weeks ending Oct. 26 and Nov. 2, respectively.

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