Thursday’s cash market pretty much divided along the lines of what markets would be most affected by Hurricane Ike-related production outages and those that would feel relatively little impact. Prices continued to rise at most locations in the Gulf Coast and Northeast, while the Midcontinent/Midwest and West were mostly softer. Weather remains a minor market factor as few areas outside the desert Southwest have any substantive cooling load remaining.

A slight majority of points were flat to about $1.20 lower, with the Rockies recording all of the triple-digit losses as moderate to cool weather dominates the West. Even the Phoenix area is peaking in the upper 90s lately instead of its usual 100s.

Gains ranged from a couple of pennies to nearly half a dollar and were largest in Louisiana.

Most of the Gulf Coast’s softness was concentrated at points in South Texas and East Texas, where coastal evacuations and processing plant closings were causing the shut-ins of numerous meters both onshore and offshore (see Transportation Notes). MOPS, for example, shut down its entire system. Also, demand destruction in coastal Texas was a major factor as many evacuated the area and most businesses and schools will be closed through the weekend.

The Energy Information Administration’s estimate of a 58 Bcf storage build during the week ending Sept. 5 was slightly higher than consensus expectations in the mid 50s Bcf. Though the volume was nominally bullish in comparison with the comparable five-year average injection of 78 Bcf, Nymex traders continued to feel quite comfortable with inventory levels and sent October futures 14.5 cents lower (see related story).

Based on reports received from 84 companies by 11:30 a.m. CDT, Minerals Management Service (MMS) said gas shut-ins in the Gulf of Mexico (GOM) had jumped from 5,405 MMcf/d Wednesday to 6,906 MMcf/d Thursday. That represented about 93.3 of the GOM’s estimated normal production of 7.4 Bcf/d, MMS said. It also reported these other statistics: oil shut-ins up to 1,260,243 b/d; platform evacuations up to 562; and mobile drilling rig evacuations up to 93 (see related story).

A hurricane warning was in effect Thursday afternoon from Morgan City, LA, to Baffin Bay, TX. Ike was still a Category Two storm with maximum sustained winds of 100 mph, the National Hurricane Center (NHC) said, but strengthening to a major hurricane (Category Three or above) was expected prior to landfall, still likely to be early Saturday. At 4 p.m. CDT Ike’s center was about 400 miles east-southeast of Galveston, TX, and moving toward the north at about 10 mph, NHC said. “Because Ike is a very large tropical cyclone, weather will deteriorate along the coastline long before the center reaches the coast,” it added.

Ike got some company in terms of Atlantic tropical activity Thursday. An area of “disturbed weather” that included some of the remnants of Tropical Storm Josephine developed about 350 miles east of the southeastern Bahamas, NHC said. However, it rated the system as having low development potential.

Florida Gas Zone 3 and the Florida citygate, which had seen Wednesday’s only losses, were rebounding with Thursday’s biggest gains as Florida Gas Transmission kept an Overage Alert Day in place.

PG&E’s ending of a systemwide high-inventory OFO had only minor negative impact on Malin and the PG&E citygate, both down a nickel or so.

Speaking for his region only, a Midcontinent producer said prices “are plummeting” with some amazement in his voice as he went on to wonder how the spot gas market could be so weak with massive amounts of offshore production off-line. And with Ike’s projected path having changed overnight to looking like a direct hit on the Houston area, that means even more Gulf of Mexico production infrastructure and coastal processing plants will be exposed to possible storm damage than when Ike had been expected Wednesday to make landfall farther down the Texas coast near Corpus Christi, he noted.

NGPL-Midcontinent began the morning in the mid $5.50s, just above its $5.53 average Wednesday, but was down to the $5 area at mid-morning, he said.

Most of the Houston-based pipeline companies were announcing plans to move operations to remote sites either Thursday afternoon or Friday. Affiliates Trunkline and Sea Robin Pipeline said their Houston offices would be closed Friday and they would have skeleton crews working from Dallas. They also “strongly” suggested that traders might want to go ahead and make weekend nominations Thursday.

The producer confirmed that quite a few people were doing just that and wrapping up deals for flows through Monday. He stressed that it was primarily traders in Houston and the surrounding area doing so, as most of their offices would be closed Friday and some would be evacuating the area.

Another Midcontinent producer commented that “after Gustav, the market just doesn’t seem to be too concerned about hurricanes entering the GOM. Remember the ‘good old days’ when a tropical storm would cause the market to rally?”

The producer confessed that he was still bearish and expects prices to go down further as the October bidweek approaches, although he doesn’t see Midcontinent cash numbers falling much below $5. “If so, I think that with higher lifting costs you’ll begin to see curtailments and/or shut-ins.” He saw that as a precarious situation for “some of those public companies who have really been touting using [natural gas] of late. If they start shutting in to help keep the price up, that may raise some eyebrows!”

A Midwestern marketer said her area had experienced a couple of nights with temperatures in the 40s earlier this week, but it was relatively comfortable Thursday. Her company postponed purchasing spot gas until Friday, when it presumes that weekend prices will be softer, she said.

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