The market was almost evenly divided between mostly small gains and losses Tuesday but leaning slightly to the downside — even more so if one gives extra weight to the huge declines in the Rockies that took quotes as low as 40 cents and left a couple of points averaging less than a dollar. Much of the U.S. is in a transition period from unusual recent heat to temperatures more befitting the approach of mid-October.

Naturally the previous day’s 22.7-cent drop by November futures played a part in the weakening cash market. A slight majority of points ranged from flat to about $1.65 lower; outside the Rockies the drops topped out at a little less than a quarter. Most of the upticks, which peaked at a little more than 60 cents, were in single digits.

The story of major price weakness in the Rockies is an old one by now: inadequate takeaway and storage capacity made worse by transportation constraints. Cheyenne Plains is still flowing not much more than half of its 780 MMcf/d capacity preceding a mid-September fire at the Cheyenne Plains Compressor Station (see Daily GPI, Sept. 18).

The market’s bearish mood is growing the closer it gets to both the end of hurricane season with little impact to Gulf of Mexico production and the end of the traditional storage injection season with near-record inventories. However, that may be tempered by recent forecasts of a colder-than-normal winter (those, however, have been contradicted by other predictions). Also, the Energy Information Administration released an outlook Tuesday saying consumers will use more gas and pay more for it this winter (see related story).

Meanwhile, it appears that Indian summer is coming to an end. After record-setting weekend heat in the Northeast and Midwest, those regions will see highs limited to the 50s and 60s (and occasionally 40s) Wednesday. Even the South is seeing more moderate weather. Houston, which has been peaking around 90 degrees in recent weeks, is due to gradually cool off to the mid 80s by the weekend. The Pacific Northwest and Western Canada have been chilly for some time now, and that isn’t expected to change anytime soon.

A Northeast utility buyer at least partially reflected the prevailing situation in reporting that his company has not been buying any spot gas recently. “There’s no weather, and we’re almost overflowing on storage,” he said. However, if local temperatures average 55 degrees (which is what Wednesday’s forecast indicated) through the end of October, he said, “we’ll be good on storage” and have enough heating degree days to burn a little out of the company’s accounts. He was not sure if the intermediate-term forecast would work out that way, saying it was a “best-case scenario.”

A utility buyer in the Lower Midwest said local weather was moderate through Tuesday, but his company should see heating loads going up over the next couple of days as overnight lows drop into the low to mid 40s. However, the cold spell will be short-lived with milder weather returning around the weekend, he said.

So far the utility has had quite a bit more power generation load than usual for October, the buyer continued. As in the rest of the Midwest, this past weekend was quite warm with highs in the mid 80s, he said. In the near-term forecasts, it looks like some fairly large variability in temperature levels, he added.

The National Weather Service’s forecast for the Oct. 15-19 workweek calls for above-normal temperatures in much of the U.S. east of a line running southward from western New York to the western end of the Florida Panhandle. The above-normal area extends through western Montana, eastern Idaho and northern Utah at its upper end but only through central New Mexico and the western tip of Texas in the south. Below-normal readings are expected in all of California except a sliver running along the state’s eastern edge.

Ron Denhardt of Strategic Energy & Economic Research looks for a 71 Bcf storage injection to be reported for the week ending Oct. 5.

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