The expected path of Tropical Storm Chantal over the Yucatan Peninsula and expectations of a much larger weekly storage injection took a little wind out of the sails of the gas futures market Monday, with the September contract showing a nickel gap lower from Friday’s low on the daily charts. However, after that initial weakness, futures proceeded in a very tight sideways band throughout the day in an unusually tranquil session. September ended the day at $3.187, down 11.6 cents from Friday’s close.

“After opening lower, I think a lot of people were focusing on two things: 1) a pretty good realization that last week’s 3 Bcf injection into storage was just an aberration, and we’ll return to a pretty large number this week, and 2) Tropical Storm Chantal is just not a threat to the producing region,” said Kyle Cooper of Salomon Smith Barney. “Still in the back of everyone’s mind is maybe that 3 Bcf indicated there were some other shifts [in demand] that weren’t one time events and maybe we’ll start seeing injections of 50 or 60 Bcf. They don’t really want to sell it heavily yet, until they see a report back into the 70s and 80s.”

Cooper said although the American Gas Association (AGA) could have more tricks up its sleeve, he is expecting an injection of 75-85 Bcf. Most other sources believe AGA will report more than 80 Bcf of gas was injected into storage during the week ending last Friday. Such a report most likely would put some downward pressure on the market.

“My guess is we would hold that $3.03 low [posted Wednesday] until we see the AGA report,” said Tim Evans of Pegasus, who also noted that initial support is Thursday’s low of $3.16. “I think storage is going to be bearish, but it’s more a question of how bearish will it be. Going straight off the cooling degree accumulations, which weren’t so high last week, this past week was 74 CDDs, the lowest level since the week of July 7. Normal would be 83 CDDs. The week prior we had 101 cooling degree days, the highest accumulation since July 1999.

“It looks to me like we’re going to clear 3 Bcf in injections,” he said with a chuckle. “We might even clear the year-ago figure, which was 55 Bcf, and it could be by a solid margin. Straight off the cooling degree days, I would say we should see a build of 90-110 Bcf, maybe a record week-to-week swing. What casts a lot of doubt into it, however, is that using the same methodology last week I was looking for 55-65 Bcf and we got 3 Bcf. It’s like the line at the end of the movie Some Like It Hot: ‘Nobody’s perfect.'”

The other big uncertainty right now is the path of Chantal once she enters the Bay of Campeche. At 4 p.m. EDT yesterday, Chantal was moving north-northwest at 14 mph and was expected to cross the coast near the Mexico-Belize border by 7 p.m. Maximum sustained winds were 65 mph. The difference between Friday’s forecast for Chantal’s path and Monday’s was a little more of a westerly direction was expected. “There’s some skepticism now about whether the storm would be big and bad enough anyway to shut in production,” said one marketer. “I don’t think we are really in fear for the infrastructure itself, so it becomes more a question of how much output are we likely to lose, and is that likely to translate into bullish storage figures. The storm is forecast to come into the Gulf of Mexico again and could strengthen to hurricane strength,” he noted.

In the unlikely event that there is a bullish storage report on Wednesday and Chantal makes a turn to the north, Evans sees resistance at the bottom of the nickel gap on Monday followed by Friday’s high of $3.395.

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