Price declines in most of the market were fairly modest Friday considering the extra demand loss of a holiday weekend and the trends of moderating weather that were expected to keep temperatures mild in the eastern two-thirds of the U.S. this week. The West even saw gains in California and other points outside the Southwest basins as Rockies supply constraints became a concern.

Perhaps eastern declines were limited to single digits in a majority of cases because of uncertainty about Tropical Storm Fabian, which did not achieve the status of the Atlantic season’s third hurricane of the year until late afternoon, when most traders had already departed their offices for a long weekend.

At 5 p.m. AST Friday the center of Fabian was about 1,075 miles east of the Lesser Antilles island chain between Puerto Rico and Venezuela, according to the National Hurricane Center. Its westward movement had slowed since Thursday to a little less than 16 mph and was expected to keep decreasing gradually in speed

However, New York City-based Weather 2000 tended to discount any hurricane threat to Gulf of Mexico production this week. After having predicted Thursday a 40% chance of the then-tropical storm entering the Gulf, the consulting firm cut those odds to 20% Friday and raised the chances of an Atlantic Seaboard encounter to 80% (see related story).

In addition to Fabian, a tropical wave “with persistent thunderstorms is moving over the southern Gulf [of Mexico] and the Yucatan [Peninsula] while an upper-level disturbance lurks over the western Gulf,” The Weather Channel said. It predicted that the combination would bring large amounts of tropical moisture into the southern half of the Mississippi River Valley over the weekend.

Prices in the Rockies, and to some extent California, got some support from production cuts in Wyoming’s Jonah Field behind the Opal Plant due to excessive water content, especially since the constraints threatened to persist into the weekend (see Transportation Notes). Kern River encouraged shippers to re-source if their Jonah supplies were affected.

It might have looked strange at first glance to see California prices rising in the initial September aftermarket when PG&E was projecting that linepack would exceed maximum target levels over the weekend and issued a high-inventory OFO (see Transportation Notes). However, a western marketer noted that the OFO applied to Saturday, two days prior to the Sept. 1-2 flows being traded Friday. “I think it’s the transition period that accounts for the seeming inconsistency between the OFO and Monday/Tuesday’s higher numbers,” she said, noting that the loose 20% imbalance tolerance indicated how mild the OFO was. Demand is certain to be much greater Tuesday as people return from the holiday than during the OFO period, the marketer added.

Excessive linepack was also a concern in the East. Texas Eastern, Sonat, Columbia Gas and Transco were among pipelines cautioning of potential problems with receipts exceeding deliveries over the low-demand holiday weekend. Transco implemented restrictions on due-pipeline imbalance make-ups and pooling point tolerances, while Columbia placed restraints on non-firm storage injections and capacity to Market Area 34 (see Transportation Notes). Sonat said it was “too close to call” on whether a Type 6 OFO might be issued Sunday, Monday or Tuesday for short imbalances.

The National Weather Service is not predicting any major heat during September except in the interior West, which hardly surprised a marketer in the Upper Midwest. “I think we’re pretty much out of the summer here,” he said. With mild days and cool nights as the current weather regime, he didn’t expect to see any significant air conditioning load for the rest of 2003.

Revisiting the weekly storage report, a Gulf Coast producer commented, “Yeah, it was a smaller than expected [injection] number, but due to the EIA reporting issue everything is suspect.” He was referring to the Energy Information Administration’s acknowledgment that subsequent data collection indicates that its weekly inventory figures for February-April understated actual volumes (see Daily GPI, Aug. 22). “It looks like there is more working gas in storage than what was previously reported,” the producer said.

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