Natural gas futures were down early Wednesday as traders and analysts mulled the market implications of the official start-up of Gulf Coast Express (GCX), a major pipeline set to unleash additional Permian Basin supply. The October Nymex contract was down 1.7 cents to $2.486/MMBtu at around 8:40 a.m. ET; November was off 2.1 cents to $2.504.

GCX had been in the commissioning phase, but backer Kinder Morgan Inc. announced late Tuesday that the 2 Bcf/d line will officially begin full commercial service from Waha to Agua Dulce starting today.

Analysts at Tudor, Pickering, Holt & Co. (TPH) said they’re modeling 1.2 Bcf/d of initial flows on GCX, with the line reaching capacity by 2Q2020. The rate at which the pipeline fills its capacity could have “significant impacts on natural gas inventories” through the fall and winter, they said.

“TPH’s estimated 2.0 Bcf/d of annual residue gas growth neatly matches additional takeaway capacity, lending itself to a status quo outlook,” analysts said Wednesday.

“The market will need to see progress on additional capacity late 2021, early 2022 to underwrite a more structural improvement in basin takeaway dynamics,” TPH analysts noted.

The start-up of GCX could weigh on natural gas prices, according to analysts at EBW Analytics Group. Resistance at $2.590 “easily held” in Tuesday’s trading as the start of GCX flows loomed, they said.

“In the aftermath of yesterday morning’s failed rally, the October contract is losing ground again in early trading this morning,” the EBW analysts said. “With GCX expected to start up today, natural gas is likely to continue to edge lower.”

As an intrastate line, GCX does not report volumes, but Genscape Inc. analyst Colette Breshears said the firm has observed “strong signals from interstate receipt points,” along with other indicators, that support the company’s statements of increased throughput this month.

“GCX is expected to temporarily relieve production constraints in the Permian and has already relieved some of the pressure from interstate export pathways in the last few days during final commissioning stages,” Breshears said.

As for the overnight weather data, the Global Forecast System added demand compared to the previous day’s forecast, while the European model dropped demand from the outlook, according to NatGasWeather.

“The added demand since last week would normally be considered solidly bullish if not for weekly builds still struggling to print under five-year averages due to very strong production,” the forecaster said. The second week of October should bring “a better balance” between cooling degree days (CDD) and heating degree days (HDD) “as HDDs continue to slowly gain and CDDs fade.”

November crude oil futures were down 97 cents to $56.32/bbl shortly at around 8:40 a.m. ET, while October RBOB gasoline was trading about 3.1 cents lower at $1.6229/gal.