A major transportation constraint starting Thursday dealt a staggering blow to several Rockies points Wednesday, where some quotes dropped below $3 for the first time in more than three years. That was the weakest part of a down market in which prices fell across the board in deference to light weather-based demand, a prior-day screen drop of nearly a dime and highly bearish expectations of a big storage build last week, with some estimates approaching 100 Bcf.

Overall losses ranged from a little more than a dime to about $1.60. CIG, Kern River, Northwest-domestic, Northwest-South of Green River, Opal and Questar rang up triple-digit plunges.

Chances of a rally before next week appear slim. Moderate to cool weather will continue to dominate in many areas into the weekend (although above normal temperatures are forecast for much of the East next week), and October futures tacked on a further drop of 12.5 cents Wednesday. A big storage injection may already be largely factored into the market, but it is still expected to add to bearish pressures on the cash market.

Although the start of fall technically is still another week away, it is already feeling like nearly mid-fall in northern market areas. That means almost no cooling load, but little if any heating load has developed to replace it. And although the western end of the South is still fair-to-middling hot, high temperatures remain subpar for mid-September in the rest of the region. Even the desert Southwest and inland California aren’t such stalwart bastions of high heat levels as previously. Sacramento’s high Wednesday in the mid 90s was predicted to fall into the low to mid 80s Thursday, while Phoenix is “only” reaching the mid 90s.

One has to go back to the trade date of May 5, 2003 to find the last time NGI has received quotes of less than $3 in its price survey. In fact a few Rockies locations saw prices lower than $2 on that day. A western marketer attributed Wednesday’s tremendous weakness at some Rockies points to Northwest’s Moab District hydro-test scheduled to start Thursday and run through next Monday (see Daily GPI, Aug. 29). The work will cause a total capacity outage at the pipeline’s Pleasant View Compressor Station; the marketer estimated the impact at 350 MMcf/d. The outage will prevent most Rockies access to El Paso and Transwestern in the San Juan Basin and from there to Southern California, he said.

Rockies spreads to El Paso’s Blanco and Bondad pools have been good through Tuesday, but they ought to get even better for the next few days for the traders who can still make the transport connection in spite of the Northwest project, the marketer continued. Somewhat offsetting the Northwest bottleneck is the Shute Creek dual connect into Northwest and CIG being down, which is worth about 110 MMcf/d taken off the market temporarily, he said. He noted that Cheyenne Hub is somewhat insulated from the constraint situation because it has more outlets to eastern markets such as Overthrust. Rockies prices should be recovering Monday with the Pleasant View outage due to end Tuesday, he said. “It’s still very quiet” in the cash market, he concluded.

A Northeast trader said the approaching winter is starting to entice some people who may be short to more evenly balance their positions “because they haven’t seen [gas cost] values this low in a long time.” The correlation, of course, is that “the longer you wait, the lower the price gets.” A lot of futures traders have been short October-November and long through February, he said; they’re trying to get out of their winter length, and that’s why the out-month contracts at Nymex are sinking considerably faster than the prompt month.

Bentek Energy is projecting a 90 Bcf storage injection to be reported for the week ending Sept. 8. A Reuters news service survey of 18 industry players found an average estimate of 91 Bcf out of a range of 77-110 Bcf.

Atlantic tropical storm activity continues to have no influence on the gas market. Hurricane Florence has faded, to be followed soon by Hurricane Gordon. Tropical Depression Eight is likely to get named Helene fairly soon but looks like it will follow in the tracks of Florence and Gordon.

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