The downhill run for cash prices got a little steeper Wednesday, and any potential leveling off space remained beyond the horizon. Declines tended to range from about a nickel to 15 cents, but most were a dime or more. Once again, Rockies pipes either experienced less softening than the general market or even ranged from flat to a smidgen higher in a few cases as the region remained a bit warmer than most of the nation, although a mild cooling trend was under way.

“Maybe AGA got it right this time,” jested a marketer in reference to the storage report debacles of the past two weeks. The association said 76 Bcf was injected into storage last week, which was below most expectations but not by much. The fact that the report enlarged the year-on-year surplus prompted the screen to go a few cents lower, but there was none of the fireworks seen on the previous two Wednesday afternoons. However, sources still expected the expiration-day weakness of the September contract to help point the way further down for cash today.

Outside of the desert Southwest and Rockies, normally hot summer weather remains in short supply. Rains generated by a mild tropical disturbance in the western Gulf of Mexico are keeping Texas relatively cool for this time of year. That resulted in double-digit price drops Wednesday for most trading points in the state.

A producer and a marketer concurred that gas has regained virtually all of the dual-fuel power generation load it lost during the high-price period of last year and earlier this year. Crude oil futures settled slightly above $27/bbl for the entire October-December strip Wednesday, they noted. And although he did not have exact figures handy, a Northeast utility buyer said gas currently is “at least” 75 cents/MMBtu cheaper at the burnertip than fuel oil in his region. The only area in which the producer could see potential for recovering lost demand was with feedstock users of gas.

One Calgary trader sounded incredulous in exclaiming, “People are selling this [intra-Alberta] market down in spite of the fire at Fort Saskatchewan” (see related story in this issue). He estimated that “at least” 300 MMcf/d of receipts had been taken off the market as a result. Whether that volume will grow “depends on how long they can keep hiding NGLs in storage facilities, I guess,” he added.

“It’s pretty nasty out there” for September numbers, a Gulf Coast producer said. Already weak bidweek prices kept falling along with the screen Wednesday, he said, and big discounts to index are prevalent at nearly all points. That indicates traders anticipate a weakening aftermarket again, he said.

Looking just beyond bidweek, a western marketer foresees a “price bloodbath” Friday due to the severely weak demand associated with the Labor Day holiday weekend.

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