Not surprisingly, the modest rally of the previous two days came to an end Thursday as generally moderate weather, prior-day futures weakness and a demand-killing hurricane ganged up to cause spot prices to decline across the board.

With drops ranging from 2-3 cents to nearly 15 cents, most of the biggest ones were concentrated in the Northeast.

For a change the Energy Information Administration didn’t have a surprise for industry analysts as its report of a 73 Bcf storage injection for the week ending Aug. 19 fell in line with consensus expectations from the low to mid 70s Bcf. September futures began their three-day settlement period with a small increase of 0.9 cent (see related story) as one analyst suggested that the previous day’s 7.1-cent drop may have been a slight overreaction to expectations of a hefty storage build being reported.

The National Hurricane Center (NHC) continued to forecast that major Hurricane Irene (Category Three or greater) would remain on a path along the East Coast, staying well offshore from the eastern coast of central and northern Florida Thursday night and early Friday before approaching the North Carolina coast Saturday. Maximum sustained winds were nearly 115 mph Thursday afternoon, NHC said.

Irene had been joined by Tropical Depression 10, which could see enough strengthening to become a named storm as it moved toward the west-northwest around midday Thursday from about 505 miles west of the southern Cape Verde Islands. But for the time being it was heading into wide open Atlantic waters. NHC slightly upgraded development odds from 10% to 20% for a low-pressure area about 1,200 miles east-southeast of Bermuda.

One indication of the East Coast demand suppression that is expected to result from Irene was Tennessee planning to implement an Imbalance Warning Saturday that encourages shippers to run negative imbalances in three market-area zones (see Transportation Notes). Tennessee Zone 6 quotes recorded one of Thursday’s biggest declines.

While the East Coast has little in the way of oil and gas production to disrupt, operators of pipelines, refineries and nuclear power plants continued to work hard Thursday to secure their facilities against wind and/or rain damage, according to news reports. New York Harbor could be shut down for a few days as a precaution, which would tend to disrupt a lot of energy operations and generate a rebound in crude oil prices.

Other than high temperatures being forecast to drop a bit Friday from the eastern South through the Mid-Atlantic and Northeast, there was little change in the rest of the weather outlook: still very hot from Texas-Oklahoma through the desert Southwest, and merely warm to cool conditions prevailing in most other areas.

Henry Hub, which had been trading at a premium of nearly 18 cents to prompt-month futures a day earlier, saw the basis spread narrow to less than a dime Thursday.

Westcoast joined Kern River Thursday in reporting low linepack, which has been ongoing this week for Kern River. Westcoast Station 2 had one of the day’s smallest dips, while gas into Kern River fell about a dime.

Possibly in anticipation of hurricane rains lowering air conditioning load along the Atlantic Seaboard over the next few days, Bentek Energy’s U.S. Natural Gas Hub Flows chart found scheduled volumes for Thursday falling at 14 of the 23 trading locations it covers, with eight points rising and one (Questar) flat. A large majority of the changes either up or down were by less than 100,000 MMBtu, Bentek said. The only very large drop occurred at the Florida citygate, down 375,000 MMBtu (9%) from Wednesday, while Texas Eastern M-3 recorded the sole big gain, with volume up by 173,000 MMBtu (9%).

A Midwest utility buyer said although her region will not be affected directly by the hurricane, the fact that it was helping lower eastern prices in general made her company’s purchases cheaper. But even with prices going down, she didn’t think that was going to induce area power generators to step up their gas buying; they just don’t have much electric demand left with high temperatures not getting above the low 80s.

The buyer said she likes to get next-month baseload business done early, so she reported finishing September deal Wednesday, buying Northern Natural-demarc supplies at index plus 0.5 cent.

A Midcontinent producer said his city broke another heat record Wednesday with a high of 108, but a cold front that evening brought the expected peak to “only 100” Thursday.

The producer said September index bonuses being paid for Enogex supplies were off from August levels due to slightly less demand. Current index premiums of 5-6 cents into Enogex are still a little steep, but that’s down from index plus 12 cents last month.

IntercontinentalExchange said initial Chicago citygate bidweek deals done Thursday on its platform averaged $3.99, which is down half a dollar from NGI‘s August index of $4.49.

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