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November gas falters ahead of storage report release

Afterextending 7.7 cents higher to close at $3.041/MMBtu in the prior session, Novembergas futures lost footing overnight ahead of the Thursday, Oct. 6, open, in profittaking and amid fundamental pressure implied by expectations for an uptick in therate of weekly injections when the next storage data is released at midmorning andfurther ahead as suggested by lackluster weather-related demand prospects.The contract was last seen 1.6 cents lower at $3.025/MMBtu.

Marketparticipants looking to the 10:30 a.m. ET Thursday release of the U.S. Energy InformationAdministration storage report that will cover the week to Sept. 30 a build to stocks from 62 Bcfto 80 Bcf, with consensus formed at a 70-Bcf injection.

A storagefigure within the range of estimates would still underperform against historicalaverages as it would compare against the 95-Bcf five-year average addition to stocksand the 96-Bcf year-ago build, but would be an impressive step up from the reported for theweek ended Sept. 23.

Althoughan addition to stocks at consensus would trim storage overhangs relative to historicalaverages, total inventories would remain elevated. An injection at the average anticipatedlevel would improve overall inventories currently at 3,600 Bcf to 3,670 Bcf, orstill 195 Bcf above the five-year average and 64 Bcf above the level seen in thecorresponding week in 2015.

Weatherconditions in store suggest softer demand, likely to free up natural gas for storagebuilding that would allow for a further improvement in the rate of weekly injections.

Weathersystems currently churning in the tropics threaten to usher in heavy wind and rainfallthat could result in damages to power infrastructure that would cause widespreadoutages and a drop in gas demand for power generation.

Category-3Hurricane Matthew was last located about 60 miles south-southeast of Nassau andabout 255 miles southeast of West Palm Beach, Fla., packing maximum sustained windsof 125 mph as it moves toward the northwest at 12 mph, according to a 5 a.m. ETThursday update from the National Hurricane Center. The center of Matthew is forecastto pass near Andros Island and New Providence in the northwestern Bahamas earlythis morning, then pass near Grand Bahama Island later Thursday, and move very closeto the east coast of the Florida peninsula through late Friday. The NHC sees Matthewstrengthening over the next 24 to 36 hours and reaching category 4 status as itapproaches Florida.

Meanwhile,Tropical Storm Nicole was last eyed at about 400 miles south of Bermuda and about565 miles north of San Juan, Puerto Rico, packing maximum sustained winds of 70mph as it moves toward the northwest at 9 mph. Little change in strength is forecaston Thursday as the system turns toward the north-northwest, while a slow, meanderingmotion is in store late Thursday through Friday and some weakening anticipated lateFriday.

Furtherout, the latest National Weather Service forecast maps for the six- to 10-day andeight- to 14-day periods show the entire country enveloped by above-average temperatures,which suggests lingering cooling demand likely to be limited, however, by lowerhigh temperatures implied by the calendar.

A lackof early heating demand and subdued late-season cooling load suggest shallow overalldemand for natural gas, which should allow for natural gas production to flow moreheavily into underground storage facilities, thereby keeping inventories on trackto what is expected to be a record-high end-of-season level estimated at 4,042 Bcf,according to the EIA.

In cashactivity, the price of natural gas booked Wednesday for Thursday flow favored theupside in much of the country, as predominantly supportive demand expectations conspiredwith a continuing uptick at the futures complex.

Lookingat the key hubs, gains on either side of 4 cents on average took spot gas pricingto indexes at $1.080/MMBtu at Transco Zone 6 NY, $2.789/MMBtu at Chicago, $3.295/MMBtuat PG&E Gate and $2.877/MMBtu at the benchmark Henry Hub.

On aregional basis, Northeast day-ahead gas price action soared by about 20 cents toan index at $1.843/MMBtu, as Midwest cash gas pricing tacked on roughly 8 centsto average at $2.758/MMBtu. West Coast and Gulf Coast next-day gas prices climbedby around 5 cents on average to indexes at $2.622/MMBtu and $2.774/MMBtu, respectively.

Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power andnatural gas indexprices, as well as forwards and futures, visitour Commodities Pages.