Trading in an atmosphere of uncertainty about whether Tropical Storm Claudette would have any serious impact on supplies or not, the cash market bowed to more negative influences Friday in registering across-the-board losses that were remarkably consistent in ranging from about a dime to 30 cents in all regions. Declines in the teens were in a slight majority.

Some were reluctant to take short supply positions into the weekend while the chance still existed that the storm might take a more northerly course into the central Gulf of Mexico, where its disruption of offshore production could be devastating. But others put their trust in predictions that Claudette was most likely to make landfall near the U.S.-Mexican border, which would probably cause only minimal shut-ins.

Instead, they noted the return of mild weather through the weekend in the Northeast and Midwest, the bearishly large storage report from the previous day and the screen plunge in response as reasons for softer prices. Naturally, the normal slump in industrial demand over a weekend played its usual minor role.

According to the National Hurricane Center, as of 4 p.m. CDT Friday the center of a “disorganized” Claudette was about 150 miles northwest of Cancun, Mexico and heading northwest at nearly 14 mph. “[T]his general motion is expected to continue with some decrease in forward speed for the next 24 hours,” NHC said. The government of Mexico discontinued all tropical storm warnings for the Yucatan Peninsula Friday afternoon.

Claudette barely brushed the northern tip of the peninsula Friday as it entered the Gulf of Mexico. Avoiding an extensive sojourn over land allowed Claudette to husband its strength, one source pointed out. The storm was expected to veer toward a more westerly track over the weekend that would take it ashore near the southern tip of Texas.

Despite the apparent shrinkage of Claudette’s threat late last week, offshore producers were taking precautions (see related story). Shell Oil announced Friday it had shut in about 66 MMcf/d of gas and 10,000 bbl/d of oil that morning in the Garden Banks region, which is 250 miles southeast of Houston. About 60 non-essential workers had been taken off platforms in the central and western Gulf, Shell said. Anadarko, BP, ChevronTexaco, ConocoPhillips, Exxon Mobil and Marathon were among others evacuating non-essential personnel, but none of them reported any production shut-ins.

In addition, drilling contractor Transocean Inc. said it stopped operations on 16 rigs along the coast from Louisiana to Corpus Christi, TX. A Transocean spokesman said most of the rigs were in the western Gulf.

Although none reported experiencing any storm-related outages as of Friday afternoon, several pipelines with offshore connections posted advisories to customers outlining what measures would be taken if Claudette forced shut-ins over the weekend.

Noting Chicago-area high temperatures below 80 degrees Friday, a Midwest trader said it would be getting a little warmer starting Monday, “but I don’t see any great increase in air conditioning load next week.”

At least one source lamented being unable to take advantage of Friday’s price drops because of lack of demand. “Things haven’t changed,” said a marketer in the Midcontinent. “I’ve barely done a deal all week. We just haven’t had the demand. It’s not like I can buy this gas for my personal use. It’s a little troublesome. We are hoping cash keeps going down, but for now we have nowhere to put it if we bought it.”

A Northeast utility buyer reported his company was still actively injecting into storage. “As of July 10th we were near 61% full with a target of reaching the 72% level by the end of July.” He went on to observe that “this injection season has been different from others in that we have continued to inject gas regardless of price or economics. In prior years, we had more discretion. This year the emphasis has been on getting the gas into the ground regardless of the price.”

Severe heat throughout much of the West had kept Rockies declines relatively modest on Thursday, but Cheyenne Hub recorded Friday’s biggest drop as temperatures fell just a bit in the eastern Rockies.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.