The market turned mostly softer Tuesday, but still had a few flat to modestly higher points in the Gulf Coast and Midcontinent/Midwest in the overall mix. It’s likely that a semi-meltdown in the energy futures complex Tuesday, along with generally bearish weather and expectations of another fairly large build in storage to be announced Thursday, will unite all cash points in declines Wednesday.

Disregarding the flatness and small gains, Tuesday’s losses were all over the map in ranging from a couple of pennies to about half a dollar, plus a drop of more than 80 cents in the Florida Gas Transmission Zone 3 average.

Henry Hub also returned to something of a sense of “normalcy” with a range of barely more than 30 cents. The super-premium prices that had stretched the Hub range to well over a dollar since last Thursday were not quoted Tuesday.

The Midwest has the best chance of avoiding further price declines on the basis of a cold front from Canada moving into the region Wednesday, sending predicted highs into the 40s and 50s over the northern Plains and Upper Midwest, according to The Weather Channel. However, it’s doubtful that will be enough to rally prices, one source said. Instead of obtaining new production to meet an increase in heating load, bountiful storage inventories in the region likely would tempt utilities and other buyers in the region to dip into their accounts and create some flexibility in case prices crash later this month as storage options begin to disappear, he said.

Otherwise, except for some lingering heat in the desert Southwest and cold in the northern Rockies, the near-term weather outlook remains bleak for raising gas demand.

The West was uniformly much weaker under the pressure of a high-linepack OFO with zero imbalance tolerance issued by PG&E (see Transportation Notes).

A Gulf Coast producer said he looks for continuing weakness in cash after the nosedive in energy futures. It looked like oil was trying to go higher at first, but the November contract ended the day down more than a dollar, he said. “The weather’s still mild [in the market areas] and storage is nearly full,” the producer went on, noting that Transco had cut its pool imbalance tolerance to 1% because of having little storage space still available (see Transportation Notes). “I guess the market will have to wait for some event” to break it out of its current mild softening trend — either some very cold weather that would rally prices, or topping off storage nearly everywhere, which would send prices into the dumpster, he said.

Nymex’s crude oil offering actually hit a new intraday record of $54.05/bbl in early trading action when the International Energy Agency raised its forecast for global oil demand this year. However, some feeling that crude prices had been overextended by their rapid move higher in little more than a month led to a sell-off that left the daily settlement down $1.13 at $52.51.

Minerals Management Service (MMS) indicated that Tropical Storm Matthew had only moderate impact in creating new shut-ins during its weekend passage through the production area offshore Louisiana. Two companies reporting cumulative Matthew-related shut-ins from Saturday through Tuesday morning said 141.9 MMcf/d of gas and 8,892 bbl/d of oil were offline during that time, according to the federal agency. No evacuations of platforms or mobile rigs were reported.

In its first update since Friday on Hurricane Ivan shut-in statistics, MMS said Tuesday that with 19 companies reporting, the daily total had fallen to 1,705.62 MMcf/d, down nearly 70 MMcf/d from Friday’s tally. The cumulative total since Sept. 11 reached 90.914 Bcf, or 1.818% of approximate annual Gulf of Mexico production of 4.45 Tcf.

The National Weather Service expects below normal temperatures north and west of a curving line from Arizona’s eastern border through the Rockies and Lower Midwest to eastern Michigan during the Oct. 18-22 business week. It predicted above normal readings for the Northeast and Mid-Atlantic and as far west as central Texas in the South.

Citigroup’s Kyle Cooper pegs his final estimation for Thursday’s storage report as a build between: 66 and 76 Bcf.

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