The signs of growing cash market weakness that surfaced Tuesday were confirmed hugely Wednesday. Whereas only a moderate majority of points were slightly softer on the previous day, prices fell across the board Wednesday, with many of the losses reaching double digits.

Significant cooling trends in the previously above-normal Northeast and Pacific Northwest, along with forecasts of cooler weather in the Midcontinent and continuing mild conditions in the Midwest, were largely responsible for the majority softness. The previous day’s decline of 6.7 cents by September futures and the essential absence of any remaining tropical storm menace to Gulf of Mexico production were additional bearish influences.

Wednesday losses ranged from about a nickel to 30 cents or so. PG&E citygate quotes failed to get a lift from a low-inventory OFO (see Transportation Notes), while the Florida citygate saw the day’s biggest drop after Florida Gas Transmission lifted an Overage Alert Day.

In the face of continuing weak weather and storage fundamentals, it’s rather dubious whether the meager futures rally of 2.3 cents Wednesday will be able to lift cash numbers Thursday (see related story).

The National Hurricane Center had ceased issuing advisories Wednesday on the remnants of Tropical Depression Ana, while it continued to project that Hurricane Bill (which reached the very-strong Category Four status) would probably be ravaging Bermuda by early Saturday but remain a nonevent for Gulf of Mexico production (see related story).

Evidence of rapidly decreasing storage injection capacity continues to grow. Southern Natural Gas said it had reached 56.5 Bcf, or 94% of total working gas capacity, at its two facilities in Louisiana and Mississippi as of last Thursday (Aug. 13). That compares with 44.4 Bcf (74%) on Aug. 14, 2008 and 51.6 Bcf (86%) on Aug. 16, 2007.

Rain was playing a large part in dampening Midcontinent power generation demand for gas, said a regional producer. Pipeline pressures are starting to creep up as storage injection options diminish, he said. However, he thinks a “lower-than-expected” storage injection report (he’s looking for 53 Bcf) will rally the market temporarily heading into the three-day futures settlement period next week.

The producer said he’s expecting September first-of-month indexes in the $2.50-2.75 range. “This will in turn cause some more shut-ins/curtailments, but some producer simply cannot afford to do this right now,” he added. “So if the gas stays on, then it’s simply supply vs. demand economics. Too much supply and not enough demand means something has to give, and that will be prices.”

A Midwest marketer said weather factors remain bearish in her area, with Tuesday forecasts of daytime highs in late August in 60s and lows in the 40s, although she acknowledged that predictions may have turned to slightly higher temperatures Wednesday. Her company is buying very little spot gas currently and doesn’t expect much September load.

The National Weather Service (NWS) predicts above-normal temperatures throughout most of the West during the Aug. 24-28 workweek, extending as far east as most of the Dakotas and the Nebraska Panhandle in the north and into South Texas in the south, but only to eastern Colorado and north-central New Mexico in between. In its six- to 10-day forecast posted Tuesday afternoon, NWS looks for below-normal readings everywhere except southern Florida east of a line running southward from the eastern edge of Wisconsin to the Mississippi-Alabama border on the Gulf Coast.

SunTrust Robinson Humphrey analyst Cameron Horwitz predicts a 54 Bcf storage injection report for the week ending Aug. 14. “The lower sequential injection is largely attributable to higher gas-fired power generation demand amid a 7% sequential increase in cooling degree days partly offset by higher Canadian imports,” Horwitz said.

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