An NGI source who had said Thursday he would not be surprised to see carnage in the cash market Friday was not, in fact, surprised as prices took a dive across the board. The plunges were especially severe in the West, where Northwest’s ongoing constraint limiting Rockies access to southbound transportation (see Daily GPI, Sept. 14) combined with high-linepack OFOs by California’s two big distributors (see Transportation Notes) and the bearish pressures felt by the entire market to produce dollar-plus drops at many points.

Declines ranged from nearly 35 cents to $1.20. Nearly all handily exceeded half a dollar.

The shell-shocked Rockies market saw prices averaging less than $2 for the first time in more than three years. The trade date of May 5, 2003 was the last time quotes had gotten that low (see Daily GPI, May 6, 2003).

Generally, where quotes across the country ranged from $4.50 to $5.50 in Thursday’s trading, on Friday the predominant range was from about $3.60 to $4.85. Prices exceeding $5 disappeared off the charts, which featured some numbers in the $1.60-80 area.

The existing litany of bearish price influences remained in effect — very mild mid-September weather almost everywhere; highly negative prior-day screen guidance (October futures had plummeted nearly 56 cents Thursday); a triple-digit storage build in the previous week that surpassed virtually all expectations; and the continued lack of a hurricane threat to Gulf of Mexico production. One more got added to the list Friday: the slump of industrial demand that accompanies weekend trading.

A screen rally of 9 cents Friday, the return of industrial demand and the National Weather Service’s forecast of above normal temperatures this week in much of the East give cash prices a fighting chance of rebounding, but it will be a tough go since the market will still have to contend with the storage and absence of a storm threat factors.

One market area that is expected to rally Monday is the Rockies because the Northwest constraint will have ended Tuesday. The region may also be getting some support from heating load if current cold temperatures continue. The Saturday forecast for Salt Lake City, UT called for a chilling low in the high 30s, while Denver was due to get down to the low 40s.

The Rockies isn’t the only area where heating load appears to be developing. What The Weather Channel (TWC) called a strong cold front was due to produce a “giant early season storm with hints of the winter to come” in the north-central U.S. over the weekend. Behind the front a major shot of cold air will make it seem more like early November than mid-September, TWC said. And the Midwest’s cold front is expected to be arriving in the Northeast on Tuesday, the forecaster added.

There are definitely some furnaces getting turned on in Western Canada, where Calgary’s low Friday was around freezing, a producer said.

This is obviously the weakest market traders have seen in a very long time, a Midcontinent marketer commented. He said it’s quite possible that futures will see another upturn because of hedge fund activity. He was not sure about cash, but thought that stronger futures might be able to pull cash higher with them. Laughing, he added, “I don’t guess on where the market is heading any more; it’s not a safe bet.” In his opinion, anyone who either bought or sold futures Friday and held the contract long enough would make money eventually because of the market’s hypervolatility.

One modestly bullish price note that the marketer found was that “it wasn’t all that hard to find a home for our gas late.” Prices were recovering in late deals, he said, suggesting that may have been because people who still have storage injection capacity left were tempted by what seemed like bargain pricing compared to earlier in the year. The Chicago citygate came up about 20 cents near the end from where it started, he said, and most other Midcontinent/Midwest points did the same.

However, the marketer noted that if storage buying was behind Friday’s late firming, it would make the October aftermarket “very weak.” It will make the time when the market comes up against full storage facilities arrive just that much sooner, he said.

The tropical Atlantic scene was close to unchanged. Hurricane Gordon was nearly stationary about 670 miles east of Bermuda but apparently was still on track to disappear in the North Atlantic in the next few days. Tropical Storm Helene was nearing hurricane strength, the National Hurricane Center said, but like its immediate predecessor was not expected to pose any threat to land.

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