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November gas notches 6th straight winning session to 21-month high

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November gas notches 6th straight winning session to 21-month high

Reversingearlier losses,November natural gas futures resumed its ascent in the week's opening sessionMonday, Oct. 10, as short covering continued into a sixth straight winning sessionto take November gas 8.2 cents higher on the day to $3.275/MMBtu.

SinceSept. 30, the front-month natural gas contract has gained 36.9 cents, or 12.7%,and now sits at its highest level since January 2015.

"Movesin the curve of late are more likely related to technical trading and marketcovering than any underlying fundamentals. Of course we don't argue there hasn'tbeen a clear underlying tightening of fundamentals, but we don't think recentmarket shifts are reflecting a single fundamental thesis," SocieteGenerale analyst Breanne Dougherty wrote in an Oct. 7 report.

Supportalso came from the crude oil futures complex, where the November WTI contractmoved $1.54 higher to close at $51.35/bbl, a new four-month high on the WTIcontinuation chart.

Howeverfundamentals remain generally lackluster as mild conditions are expected acrossmost of the U.S. through the end of October. National Weather Service outlooksfor the six- to 10-day and eight- to 14-day periods show the bulk of thecountry encompassed by above-average temperatures, likely to equate to weakerenergy demand given the time of the year.

SNL Image

SNL Image

Inits latest "Natural Gas Weekly Update" covering the week to Oct. 5,the U.S. Energy Information Administration reported that total U.S. gas consumption notched a 4%decline week on week, driven by a 14% drop in power burn.

Diminisheddemand should free natural gas for storage building, allowing for a furtherimprovement in rate of weekly injections, after the EIA outlined what has thusfar been the second-largest build of the refill season in its most recentinventory data.

TheOct. 6 storage report detailedan 80-Bcf injection for the week to Sept. 30 that took total working gas stocksto 3,680 Bcf, or 74 Bcf above the year-ago level and 205 Bcf above thefive-year average of 3,475 Bcf. The build was below both the 95-Bcf five-yearaverage addition and the 96-Bcf injection seen in the corresponding week in2015, but was above the average anticipated 70-Bcf injection.

Onlythe 82-Bcf addition to stocks outlined for the week ended May 27 bested theweek's data throughout the refill season thus far. However early estimates forthe next report, to be released Oct. 13 showing data through the week endedOct. 7, point to an injection near 90 Bcf, which would be the biggest build ofthe season and would compare favorably to the 97-Bcf year-ago build and a 92-Bcffive-year average injection.

Incash trading, price action for natural gas booked on Oct. 10 for Tuesday flowpushed higher in tandem with the natural gas futures complex as well asrecovering demand after the weekend. Northeast markets saw the biggest gainsbut also the lowest prices with Tetco M3 up almost 30 cents to an index above$1.05 and Transco Zone 6 NY up almost 35 cents to an index near $1.35.

Spotdeals at the Chicago market were up more than 10 cents to near $3.00 whileaction at the benchmark Henry Hub in Louisiana was pegged more than 15 centshigher on the day near $3.15.

Gainsalso extended to the western U.S., where PG&E Citygate added more than 10cents to near $3.50, Malin climbed more than 15 cents to above $2.90 and SoCalBorder jumped 20 cents to near $3.00.

Market pricesand included industry data are current as of the time of publication and aresubject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.