Prices fell at all points Thursday, with the largest declines of about a quarter or more concentrated in the Rocky Mountains. It was hardly a surprise to encounter a weakening market, one trader said. A static screen had no influence on cash, he added, but the key factors were familiar to everyone: mild weather everywhere and essentially full storage approaching the winter.

Prices are almost certain to see further softness today and probably the downturn will grow even greater, sources said. No change in weak weather-related demand is expected, and the typical slump of industrial load over a weekend also will come into play, they said. Another indicator of more price slippage was the fact that Thursday’s quotes were going down as trading proceeded in all market regions, although a few points registered modest rebounds along the way.

Western numbers are considered especially likely to take a dive. SoCalGas took the unusual step of declaring an Overnominations Day for a weekday today (they usually occur over a weekend), and PG&E’s projection of linepack exceeding its maximum target levels Saturday and Sunday makes it a good candidate for following suit with its own high-inventory OFO Saturday, a western trader said. The storage fields of SoCalGas are so close to full that the LDC was forced to deter any further overdeliveries of gas at the border, he continued, predicting a plunge in border pricing today.

A Midwest marketer expressed surprise that Chicago citygates saw a small bounce near the end. “It seems like prices there would be cratering, since none of the area LDCs are buying gas currently,” he said.

A trader at Pacific Northwest/Rockies points noted that the spread on Northwest Pipeline between Sumas and domestic numbers grew to more than 30 cents Thursday (it was 17 cents in November indexes). The Sumas premium over domestic prices “is going to keep getting larger because Northwest is already threatening an OFO related to the Kemmerer constraint (see Daily GPI, Oct. 30). That just aggravates the situation by encouraging more buying at Sumas. Then the spread will really jump when an OFO finally does get issued,” he said.

Although the “official” storage withdrawal season is now under way, a couple of marketers agreed that virtually nobody is in withdrawal mode yet. It wouldn’t be good economic strategy to take gas out of storage at this point while the weather is so moderate that current burns are minimal, one said. Unless they’re forced into prorated early withdrawals by the tariff of their storage accounts, storage holders should wait until prices get significantly higher this winter to begin claiming their gas, he said.

One unknown variable in the market picture is Tropical Storm Michelle, which was expected to strengthen into a hurricane either late Thursday or today. The center of Michelle was about 345 miles south-southeast of the western tip of Cuba Thursday afternoon and moving slowly toward the north-northwest. Although its greatest U.S. threat was believed to be in the Florida peninsula, there was potential for Michelle to approach eastern Gulf of Mexico production.

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