With the exception of a couple of flat Midwest citygates, prices ranged from barely lower to down more than 30 cents at the Southern California border Friday. Sources cited new forecasts indicating less severe cold weather over the weekend and this week as the chief factor in market weakness.

Earlier in the week the National Weather Service had predicted below normal temperatures in nearly all the eastern half of the U.S. for the Oct. 6-10 period. But in Friday’s six- to 10-day forecast for Oct. 9-13, NWS expected below normal readings only for the southern third of Florida and for the Pacific Northwest and California coast. Most of the rest of the country should be above normal, it said.

A Midwest utility buyer reported that temperatures in her area fell to around freezing Wednesday night, but hadn’t gotten quite that low Thursday night. She acknowledged that at midweek freezing conditions were forecast in the Midwest for the weekend, “but things have changed. It’s looking fairly mild [with highs] up to the 70s in the next few days, and our current forecast indicates that will continue [this] week.”

One group said uncertainty about Tropical Storm Larry’s potential movement “encouraged some producers to shut in some U.S. Gulf Coast production.” However, several sources told NGI they were unaware of any storm-related supply cuts, with one commenting that predictions of Larry’s continuing to head south into Mexico’s Bay of Campeche made shut-ins unlikely.

And as far as a spokeswoman knew, the Minerals Management Service office in New Orleans did not receive any reports of shut-ins. If any did occur, they must have been “minimal, minimal, minimal” or otherwise the MMS staffer responsible for such reports would have submitted something, she said.

At 4 p.m. CDT Friday the center of Larry was about 110 miles east-northeast of Veracruz, Mexico, according to the National Hurricane Center. After remaining stationary for part of the day, it resumed “drifting erratically toward the southwest” with a more southerly tracking anticipated, NHC added. “This motion will gradually bring the center closer to the coast of Mexico.”

Hurricane Kate became the “third major hurricane of the 2003 season,” getting a Category 3 ranking with maximum sustained winds of nearly 115 mph, NHC said. But Kate remained a non-event for gas prices. It was moving toward the west with its center about 905 miles east-southeast of Bermuda at 5 pm. AST Friday, but NHC expected it to make a gradual turn toward the west-northwest within the succeeding 24 hours. Kate was considered unlikely to get near any land masses.

A Gulf Coast marketer said he had “not heard word one” about Gulf of Mexico shut-ins. But the supply area saw some late upticks Friday, he added, interpreting them as meaning people “didn’t want to take chances” with any possibility of supply disruptions from the storm. Several Gulf Coast points that normally trade at a discount came up flat to Henry Hub in late deals, the marketer said.

But another source focused on Henry Hub being “so weak in relation to Nymex, Chicago and other Gulf points.” Current Chicago-Hub spreads “are the biggest I’ve seen in a long time” (Chicago citygates ran about 30 cents above Henry Hub Friday). The two were approximately flat to each other for about two months until recently, the source observed.

It might be dwindling storage flexibility on pipes that take gas at the Hub contributing to its relative weakness, she went on. A Sonat OFO and new restrictions on Transco (see Transportation Notes) tended to support her speculation.

An Overnominations Day declaration for Saturday by SoCalGas applied heavy downward pressure on prices at many western points, with border quotes taking the biggest hit. However, Northern California losses were relatively light as PG&E failed to issue an OFO despite projecting that linepack would bump up against its maximum target levels over the weekend.

A SoCalGas spokeswoman said the giant LDC was pretty close to full on storage, “but we still have some injection capacity left.”

A Florida utility buyer who had no weekend deals to report said there is “no AC [air condtioning] or heating load whatsoever” in the state.

A Midcontinent trader anticipates rebounding cash prices Monday due to the screen rise of just over 8 cents Friday. He also pointed to ancillary support from the crude futures market, where the November contract settled above the key psychological level of $30/bbl due to concerns about TS Larry forcing the shutdown of key Mexican export terminals and also to the previous week’s OPEC announcement of production cuts continuing to reverberate in the market.

Citigroup’s Kyle Cooper said his initial estimation for this week’s storage report looks for an injection in the 60-70 Bcf range. That would compare with 42 Bcf a year ago and a five-year average of 57 Bcf. “It would take a build of 91 Bcf to establish a new record weekly maximum injection,” Cooper added.

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