As presaged in late declines a day earlier, the physical market began to retreat for the most part Thursday from two strong surges earlier in the week. The Northeast cold snap that had helped generate the bullishness of Tuesday and Wednesday was expected to be yielding to milder weather during the weekend.

A few eastern points were flat to slightly higher Thursday, but otherwise cash numbers fell from a couple of cents to more than 30 cents, with the West seeing most of the larger losses. San Juan Basin took one of the biggest hits of about 30 cents after El Paso canceled a low-linepack OFO on the previous day.

The approaching Northeast warm-up was responsible for some softness, and a couple of sources indicated that a “correction” of overbought positions was able to offset more supportive cold weather moving into the Lower Midwest, Midcontinent and even parts of the South. Fronts converging towards each other from the northern Rockies and Upper Midwest were leaving lows in the 30s and 40s in their wakes. Frost was possible overnight Thursday as far south as North Carolina, according to The Weather Channel, and similar conditions are likely in the Ark-La-Tex region and much of the rest of the Southeast by early next week.

Meanwhile, triple-digit highs were starting to recede in the desert Southwest, and Indian summer has departed northern sections of the West. However, the trend toward more seasonal weather will be brief, TWC said, as potentially record-setting highs return to the high Plains late in the weekend and most of the West begins seeing above normal temperatures that likely will last through next week.

The downward trend in late deals was repeated Thursday, reported a marketer quoting late Waha purchases in the low $4.50s about a dime less than earlier packages.

Futures traders gave a collective yawn following the Energy Information Administration’s report of 84 Bcf in storage injections last week. The volume was towards the high end of prior expectations and put working gas inventories over the key psychological threshold of 3 Tcf. The screen tended to meander in the vicinity of flat for the rest of the day before finally closing out with a 1.1-cent loss. Such seeming indifference was not surprising since many believed reaching the 3 Tcf mark was a foregone conclusion that had long been factored into the market.

A Canadian producer said he also detected little reaction to EIA’s announcement of a revamp of storage survey methodology (see related story), including adjustments to 16 weeks of previous reports dating back to July 4. “It’s ridiculous; that’s my opinion,” a marketer commented on the plan for retroactive revisions.

But an East Coast utility buyer took a more relaxed view, although she joked that it “might be a scary Halloween for gas traders since we get the revisions in EIA storage figures the day before.” The buyer continued that at first “I thought they [EIA] should make just one change in the report reflecting this week’s injections and let the retroactive ones go, but then I realized that might throw off the year-earlier comparisons in 2004.”

“We’re quite happy to see the cash-screen convergence holding,” a producer said. Following a Henry Hub discount of a little more than 4 cents from November futures on Wednesday, NGI‘s Hub average of $4.91 Thursday nicely matched the screen settlement of $4.913.

A Northeast trader said the market was “way overdue on cash catching up with the Merc” after having the physical numbers lag 60 cents or so behind in recent weeks. He added that with colder eastern weather due to stick around for a while, he had to think there won’t be any significant screen-Hub divergence for the rest of the month. The trader observed that his region was “getting pretty cool, and it’s about time since we’re into late October.” He perceived “a little extra supply” being available Thursday and likely also Friday, saying he suspected it might be due to people pulling from storage to sell gas after two major cash gains Tuesday and Wednesday.

An eastern utility buyer said she had “started thinking about November business,” but had no plans to become active until next week.

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