The cash market broke out of its trading pattern rut earlier this week to some degree Wednesday. There were still several flat to about a dime higher quotes in the Midcontinent, Rockies and a few other western locations, but not only were the gains much fewer than on Monday and Tuesday but also much smaller. Prices continued to soften at all points in the East outside the Midcontinent.

The majority losses ranged from 2-3 cents to a little more than 30 cents and tended to be largest in the Gulf Coast and Northeast.

There was essentially no change in the bearish factors extending a softening market: little weather-based demand, a weaker prior-day screen, the financial crisis and highly ample storage inventories.

November futures struggled all day but barely got into positive territory at one point in the afternoon only to fall back to a drop of 2.6 cents on the day (see related story).

A cold front that followed a series of heavy thunderstorms into Texas Tuesday wiped out nearly all lingering cooling load in the Lone Star State, and it was having a similar effect in sections of the South as it proceeded eastward across the region. Meanwhile, forecasts of highs on either side of 70 in much of the Midwest and Northeast continued to assure that heating load in those areas was inconsequential at most.

Parts of the desert Southwest and interior California still have some air conditioning demand for gas, but otherwise the West remains moderate to chilly. However, The Weather Channel reported that snow levels in mountainous sections of the upper West should be descending Thursday night and Friday to below 3,000 feet from Wyoming to Oregon northward. And Wednesday’s low in the mid 30s in Calgary indicated that Western Canada is starting to get an early taste of winter.

The restoration of shut-in Gulf of Mexico gas production apparently ground to a halt Wednesday. Minerals Management Service (MMS) said 62 companies had reported 2,860 MMcf/d as still off-line, unchanged from Tuesday’s figure. This followed a reported shut-in reduction of 141 MMcf/d on Tuesday. MMS did say crude oil outages had fallen Wednesday to 565,793 b/d and evacuated platforms had dropped by five to 85.

A Midwestern marketer said he expects prices to remain flat to softer until a lot more significantly colder weather arrives, and there was none of that in sight at this point. Temperatures are getting fairly chilly in the Midwest, but few people are inclined to turn on their furnaces yet, he said.

It looks like Midcontinent basis is a little stronger than last week, the marketer went on, but there’s still a glut of supply in the area and Midcontinent pipes continue to run full or nearly so, depriving some producers of access to potential markets.

Noting that Northern Natural’s Ventura location extended its premium over the demarcation point to around $2.80, the marketer said his company was having difficulty figuring out why the spread had become so huge. However, he noted that being farther downstream, Ventura tends to get more of a market-area price while demarc is priced closer to the Midcontinent supply area.

Analysts for SunTrust Robinson Humphreys/the Gerdes Group said the latest MMS data indicate that roughly 39% of Gulf of Mexico production remains shut in more than three weeks after the passage of Hurricane Ike. “To date, we estimate production lost as a result of hurricane activity totals approximately 215 Bcf, including roughly 20 Bcf attributable to onshore processing/compressor facility outages,” they said.

In its six- to 10-day forecast for the Oct. 13-17 workweek, the National Weather Service looks for above-normal temperatures everywhere east of a line running southward from western Minnesota through central Louisiana. Below-normal readings are expected from eastern California through the Rockies and most of the Pacific Northwest to the western ends of the Dakotas and Nebraska.

Barclays Capital analysts expect a storage build of 88 Bcf to be reported for the week ending Oct. 3, saying it would reflect the continued Gulf of Mexico shut-ins and return of gas processing facilities. Tim Evans of Citi Futures Perspective is projecting injections of 80 Bcf for each of the three weeks ending Oct. 3, Oct. 10 and Oct. 17. Stephen Smith of Stephen Smith Energy Associates said his current estimate of an 87 Bcf addition is up from an earlier one of 82 Bcf.

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