Prices declined across the board again Thursday, but things could get really ugly Friday after the Energy Information Administration reported a heavily bearish storage injection of 108 Bcf for the week ending Sept. 8. The announcement induced a plunge of 55.7 cents by October futures, causing the prompt-month contract to explore sub-$5 territory for the first time in two years (see futures story).

Thursday’s decreases ranged from a little more than 15 cents to nearly 50 cents and were fairly even across the various geographic market areas. Several Rockies points that had plummeted by dollar-plus amounts Wednesday but still managed to average more than $3 that day saw further softening Thursday take their averages solidly below $3.

Cash prices are now coming under negative pressure from several directions: continuing drops in cooling load with little if any compensation from heating load; great weakness in natural gas futures (which is being accompanied by an extended slide in the crude oil contract); a sizeable gain in the storage surplus over prior periods after several months of decline; and the continuing lack of a hurricane threat to Gulf of Mexico production with only about two weeks left in the August-September peak of the season. The same conditions will be in effect Friday, but they will be supplemented by the typical drop in industrial load over a weekend.

Earlier this week Questar had been the sole pipe trading above its first-of-month index. But with the past two days’ price plunges Questar has joined the rest of the point pack in seeing large deficits to index. In fact, Questar is now among the large majority of points being priced at more than a dollar (in several cases more than $2) below first-of-month levels.

The Southern California border fell about 30 cents, but it likely would have been weaker if an e-mailed OFO declaration by SoCalGas (see Transportation Notes) had not been delayed until the afternoon.

And traders of Malin and the PG&E citygate may also have to contend Friday with a high-inventory OFO being declared for Saturday by the giant dual utility. PG&E projected Thursday that its linepack would rise to a couple of notches above its maximum target level Saturday and then go much higher Sunday.

The U.S. will have very little cooling load left late next week. In its latest six-to-10-day forecast posted Thursday (https://www.cpc.ncep.noaa.gov/products/predictions/610day/), the National Weather Service (NWS) looks for above normal temperatures only in peninsular Florida and in South and West Texas. It expects those areas to be enveloped by normal conditions south and east of a line running due west from the border between the Carolinas until it curves south through western New Mexico. Otherwise, according to the NWS, the rest of the nation will experience below normal temperatures.

“Stragglers out there had to sell into a much lower-priced market,” said a Texas-based marketer who noted that cash numbers dropped about a dime very quickly after the storage report came out. Of course, little daily trading remained to be done by that time. The marketer said he wouldn’t be surprised to see some real carnage in the cash market Friday. Access futures trading was up a little from the close Thursday afternoon, but that wouldn’t be able to avert more softness in the physical market Friday because “there’s so little weather-based demand” with conditions mild to cool almost everywhere, he said.

“This [big storage build and screen plunge] is the correction that we’ve been awaiting for a long time,” said a Midwestern marketer. He looks for winter futures (December-February) to come down to the $8.50 area in the not too distant future.

The marketer said his company had talked most of its customers into not doing anything drastic about gas supplies and being patient about waiting for prices to come down from their previously stratospheric levels, but had lost one account as a result. It was a combination of things, he said, but basically the client was afraid of hurricane damage to offshore operations causing a price spike and didn’t want to be patient. “I’m sure he regrets it now,” the marketer said.

It’s not yet cool enough in the Midwest to have any furnaces turned on, he continued. Unfortunately, his company is currently in a long supply position and thus unable to take advantage of the recent major price weakness. “We had been hoping for cold enough weather by now” to work off the excess gas supply, the marketer said, but now it looks like the end of next week at the earliest that he’ll be able to start buying daily gas again.

Despite Tropical Depression Eight taking on the moniker of Tropical Storm Helene, it was status quo for gas market impact Thursday — that is, zilch. Hurricane Gordon was moving northeastward far to the east of Bermuda Thursday, and it still appeared that Helene would follow a similar path.

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