The mild firming that had marked most trading in the first two days of this week switched to mild softening Wednesday. Temperature fundamentals remain benign in most regions. The screen slipped for the third day in a row, although Wednesday’s dip, like Tuesday’s, was small at only a couple of pennies or so. And traders are expecting another large storage injection report Thursday morning to whack another chunk out of the year-on-year deficit.

Volatility was still a no-show in this week’s market. The earlier gains seldom exceeded a dime, and Wednesday’s price movement ranged from flat to a little more than a dime, with most declines around a nickel or less. Most of the flat points were in the West, where nighttime lows in the 30s and 40s from the Pacific Northwest and Western Canada through parts of the Rockies and Upper Plains gave prices a bit of heating load support.

Except for East Coast traders who might become subject to physical impacts, there was little the market could do about Hurricane Isabel except watch and wait. Virtually all of its potential effect on gas load, both positive and negative, had been hashed out in discussions since last week while the storm made its slow approach toward the U.S. It seemed that the only certain thing was that Gulf of Mexico production would be spared from disruption.

A hurricane warning was in effect Wednesday afternoon from Cape Fear, NC to Chincoteague, VA. At 5 p.m. EDT Isabel’s center was about 315 miles south-southeast of Cape Hatteras, NC and moving north-northwest at nearly 14 mph. The National Hurricane Center said a turn toward the northwest and an increase in forward speed were expected prior to landfall in eastern North Carolina sometime Thursday.

Prior guesses about the storage report tend to look for an injection between 85 Bcf and 100 Bcf.

Although natural gas saw only another small loss at Nymex, heating oil and crude oil futures tumbled after the government reported big increases in crude imports and refined product inventories. The crude contract for October fell a little more than half a dollar to settle at just above $27/bbl, but that was only after rallying from a low of $26.80, its lowest point since early May.

Desert Southwest highs around 100 degrees or more and the colder conditions in the northwestern quadrant will represent the U.S. temperature extremes Thursday. Otherwise, not counting the hurricane problems due along the middle East Coast, weather will be fairly pleasant, but a strong Pacific cold front will be entering western portions of the Midwest, according to The Weather Channel.

A Mid-Atlantic marketer who trades the Northeast said he was sitting tight and “hoping we don’t see anything from Isabel other than heavy rain.” In another two or three weeks the market might start seeing some furnaces getting turned on in the Northeast, he added, but for right now “it’s still very pleasant weather” in the region and thus there is neither heating nor cooling load to any appreciable extent. With nighttime lows in the 50s, people will just shut the window and maybe put a blanket on the bed, but they don’t need to turn on the heat yet, he said.

Snow continued through early Wednesday afternoon in the Calgary area, a producer said, but area thermometers were due to get as high as the 70s in the next day or two. “We’re quite used to these big temperature swings.” He agreed with a Midcontinent marketer that with the small price changes lately, the current market has been extraordinarily quiet for them. “I was off practically all of last week but didn’t have any trouble at all catching up this week,” the producer said.

The extension of PG&E’s high-linepack OFO (see Transportation Notes) again weighed on Northern California numbers, but the OFO’s imbalance tolerance is considerably looser at 10% for Thursday than it had been at zero Wednesday.

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