In a sign that this week’s steep cash market slide is beginning to stabilize, most of Wednesday’s majority losses were only in single digits and a significant number of scattered points were flat to about a nickel higher. Moderate temperature increases were predicted for Thursday in the Northeast and some parts of the Midwest, although they weren’t expected to spur any large increases in overall heating load.

Declines ranged from 2-3 cents to about 20 cents.

Any further firmness in cash prices Thursday will be challenged by the continuing weakness of September futures, which fell another 23.9 cents Wednesday.

Although temperatures will still be relatively mild for mid-August, the Northeast is beginning a warm-up that will take New York City from Wednesday’s high of 72 to the low 80s Thursday. Heavy rains that have produced flooding are keeping heat levels subdued in much of the Midwest, but such locations as Cincinnati are recording Southern-like highs in the mid 90s.

Henry Hub fell only a little more than a nickel while September futures dropped about three times as much, widening the unusual Hub premium over the screen to about a quarter.

Barring a highly improbable reversal of direction, the saga of Hurricane Dean is over for U.S. offshore producers. Of course, Mexico’s national oil company, Petroleos Mexicanos (Pemex), now must assess Dean’s impact on Pemex infrastructure in the Bay of Campeche. The storm reached Category 2 status again during its sojourn through the bay but weakened to Category 1 after making its second landfall late Wednesday morning between the Mexican Gulf Coast cities of Tampico and Veracruz. It posed a threat of flooding rains in Mexico’s interior.

U.S. producers were busy returning workers to Gulf of Mexico facilities. Minerals Management Service said its Wednesday tally of evacuations had shrunk to 19 platforms and three mobile rigs, while reported shut-ins were down to 83 MMcf/d of gas and 24,815 b/d of oil.

Issues of excess supply in some sections of the West are starting to resurface. Besides Northwest’s ban on interruptible injections into the Jackson Prairie storage facility that began Wednesday and its mandate that interruptible accounts be emptied by Sept. 7 (see Daily GPI, Aug. 21), Kern River reported high linepack systemwide Wednesday after a respectable period of normal linepack levels. Kern River said it would “take any necessary action to reduce the excess supply” for Thursday’s gas day.

The Florida citygate and Florida Gas Zone 3 in Louisiana dropped about 20 cents each despite Florida Gas Transmission extending an Overage Alert Day into its third day Wednesday (see Transportation Notes).

Natural gas futures potentially could see a rebound in the next few days on retracement or profit-taking, a Midcontinent producer said. But that was the only chance he could see for cash’ numbers rallying this week; there’s not a lot of heat in near-term forecasts, he said. A lot of storage locations are close to 90% full, as far as his company can tell, he added.

The producer anticipates sub-$5 prices in the Midcontinent next month, saying he was seeing Panhandle Eastern basis of about minus 75 cents. The last time Midcontinent indexes were that low (actually less than $4) was in October 2006 (see Weekly GPI, Oct. 1, 2006).

He had expected September basis to get stronger with Nymex seeing so much weakness lately, but the Michigan citygate is about the only place where it’s happening, he said. Basis for MichCon deliveries had been minus 4 cents last week, he said, but now they’re trading at plus 2-3 cents.

There’s no doubt that cash prices are looking soft again Thursday, said a Texas-based marketer. The screen’s near-quarter decline Wednesday almost guarantees it, he added. He saw a Henry Hub swing swap package for the rest of August being offered at $5.66 and bid at $5.62 on ICE Wednesday afternoon; that’s about 20 cents below Wednesday’s Hub average. He said he hadn’t seen any near-term weather forecasts that would be supportive of a cash rally.

The daily market is pretty quiet now, the marketer said, so a lot of traders are getting ready for September bidweek. It looks pretty certain that indexes will see big drops, he said.

The National Weather Service’s (NWS) forecast for the Aug. 27-31 workweek calls for above-normal temperatures in all of the Northeast, the Mid-Atlantic, the coastal Southeast as far south as northern Georgia and the eastern edge of the Midwest. NWS also expects above-normal temperatures throughout the West except for Washington state, most of Oregon and the northern end of Idaho. Below-normal readings are predicted for southern and southeastern Texas and all of Louisiana except for its northern edge.

A Reuters survey of 21 industry analysts found an average expectation of a 30 Bcf build in storage inventories for the week ending Aug. 17. Estimates ranged from 20 Bcf to 38 Bcf, the news service said. Ron Denhardt of Strategic Energy & Economic Research said he anticipates a 20 Bcf injection.

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