Hot weather wasn’t much of a factor in Wednesday’s market as forecast peaks in the mid 90s or higher remain confined to parts of South Texas, the desert Southwest and inland California. Otherwise moderate to cool or chilly conditions dominate the rest of the North American outlook.

However, the previous day’s 6.6-cent rally by October futures and the possibility of a new Lee-like threat to Gulf of Mexico (GOM) production combined to cause nearly all of the cash market to range from flat to a little more than a nickel higher Wednesday. A few scattered locations realized drops of a couple of pennies to about a nickel.

Cash traders will have neutral futures guidance Thursday after the prompt-month contract finished Wednesday up a mere 0.2 cent (see related story).

Quotes for Tennessee Zone 4 on Line 300 continued to plumb new depths with bottom-end pricing sinking as low as $1.30. Their weakness likely was exacerbated by the pipeline issuing an Imbalance Warning for that area in response to restricted takeaway capacity related to Stagecoach Storage facility maintenance that will last through Thursday (see Transportation Notes).

The last time NGI‘s price table recorded quotes below $1.30 was nearly two and a half years ago on the trade date of April 13, 2009 (see Daily GPI, April 14, 2009). Northwest-South of Green River’s low of 34 cents that day led bottom-end dips to under a dollar by several Rockies locations.

Although gone, former Tropical Storm Lee certainly was not forgotten as its residual flooding impact was still being felt in the Southeast and was spreading through the Mid-Atlantic into the lower Northeast. Lee’s legacy also continued to hamper GOM and Gulf Coast operations (see Transportation Notes).

However, GOM restoration efforts took a big leap forward. Lee-related shut-ins reported to the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) had already started to fall after peaking Monday. And BOEM said while 2,204.6 MMcf/d (41.6% of normal) of GOM gas was still offline Tuesday, the volume plunged to 958.4 MMcf/d Wednesday (18.1% of normal) based on reports from 54 companies received by 11:30 p.m. CDT. Oil shut-ins were down to 516,451 b/d from 846,670 b/d, BOEM said. The number of evacuated production platforms and mobile drilling rigs dropped from 131 to 21 and from 12 to four, respectively.

But Gulf producers may not be out of the woods yet when it comes to tropical storm shut-ins. The National Hurricane Center (NHC) raised the chances of a broad low-pressure area over Mexico’s Bay of Campeche becoming a tropical depression within 48 hours to 70% Wednesday and said it showed continued signs of organization amid favorable environmental conditions. Sure enough, late Wednesday afternoon the NHC announced the formation of Tropical Storm Nate. Like Lee, the new system was projected to be slow-moving — giving it plenty of time to strengthen over warm Gulf waters — and possibly follow much the same tracking as Lee.

Hurricane Katia had regressed to a Category One storm with 85 mph winds Wednesday after reaching major status (Category Three or greater) a day earlier. Katia’s path was still anticipated to curve to the northeast and keep it out to sea, with its primary U.S. impact likely to be dangerous surf conditions along much of the East Coast, NHC said.

The 2011 Atlantic hurricane season officially made it past the first half of the alphabet with the upgrade Wednesday of Tropical Depression 14 to Tropical Storm Maria. After brushing against the northern sides of the Leeward Islands, Puerto Rico and Hispaniola, Maria was expected to take a northward course toward Bermuda that would closely resemble that of Katia.

A Midcontinent producer said gas supplies were backing up in his region because power generation load has fallen a lot, noting that highs in much of Oklahoma are now being limited to the low 80s after regularly peaking in the 100s as recently as last week. Cash numbers were a bit lower at first but then saw a small rebound that he said likely was based on modest mid-morning screen strength. He estimated a drop of about 0.5 Bcf/d cut in load from Midcontinent power generators, saying it was making for “tough sales” these days.

The producer said he fears there will be a Midcontinent price “bloodbath” in coming weeks unless either something happens to boost demand again or more takeaway capacity opens up; for now both OGT and Enogex are running full and can’t take on any additional gas, he added.

Analysts made these fairly wide-ranging projections of storage additions during the week ending Sept. 2: 61 Bcf by Stefan Revielle of Credit Suisse; also 61 Bcf by Stephen Smith of Stephen Smith Energy Associates; 67 Bcf by Kyle Cooper of IAF Advisors; and 56 Bcf by Tim Evans of Citi Futures Perspective.

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