With a major hurricane making landfall early Wednesday over the Gulf Coast, natural gas futures were down a few cents in early trading as plump storage inventories continued to weigh on prices near the front of the curve. The October Nymex contract was off 2.7 cents to $2.335/MMBtu at around 8:50 a.m. ET.

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Hurricane Sally made landfall along the Alabama coast as a Category 2 early Wednesday, according to the National Hurricane Center (NHC). The storm is likely to cause “catastrophic and life-threatening flooding” over parts of the north-central Gulf Coast.

As of 8 a.m. ET, Sally was about 25 miles west-southwest of Pensacola, FL, traveling north-northeast at close to 3 mph and carrying maximum sustained winds of 100 mph, the NHC said.

“A north-northeastward to northeastward motion at a slightly faster forward speed is expected later today and tonight, followed by a faster northeastward motion on Thursday,” forecasters said. “On the forecast track, the center of Sally will move across the extreme western Florida panhandle and southeastern Alabama through early Thursday, and move over central Georgia Thursday afternoon through Thursday night.”

Sally’s arrival into the Gulf of Mexico has prompted production shut-ins. Production estimates from Genscape Inc. early Wednesday showed output relatively flat day/day, but the firm pointed to signs of a return to normal operations at some facilities in the region.

“Pipelines Garden Banks and Nautilus announced that personnel evacuated as a precaution ahead of the storm are returning to platforms as Sally has drifted further east compared to earlier estimates,” Genscape analyst Dan Spangler said in a note to clients. “The current track also has fewer large industrial facilities, and demand impacts have been muted.”

Data early Wednesday suggested strengthening in the supply/demand balance, according to Bespoke Weather Services. Liquefied natural gas feed gas volumes have carried over recent gains, and power burns appear stronger on a weather-adjusted basis, the firm said.

Still, it appears that “the market just is not really responding to daily changes in balance data, as most of the action seems to be in the land of spreads, which is difficult, as the market is struggling to figure out where fair value is in the this unique situation we are in,” Bespoke said. “Until the issue of containment is clearer, we still prefer bullishness expressed in winter contracts.”

Looking ahead to Thursday’s Energy Information Administration (EIA) storage report, NGI’s model predicted an 84 Bcf injection for the week ending Sept. 11. Last year, EIA recorded an 82 Bcf injection for the period, and the five-year average is a 77 Bcf build.

Energy Aspects issued a preliminary estimate for a 90 Bcf build for the week. The firm estimated a “steady recovery” in production during the report period at 2.0 Bcf/d week/week, with power burns down 3 Bcf/d week/week.

“Our weekly balances peg end-September storage near 3.86 Tcf, a level more than healthy for a typical end-October,” Energy Aspects said in a recent note to clients. This makes “avoiding a 4.0-plus Tcf carryout come end-October nearly impossible unless there is a sharp reversal in pricing. A mild start to winter could see injection activity extend into early November, further swelling inventories.”

October crude oil futures were up 69 cents to $38.97/bbl at around 8:50 a.m. ET, while October RBOB gasoline was up about 1.1 cents to $1.1494/gal.