With expectations that storage will be full at the end of the injection season, futures market participants have said for weeks that the only thing that could stem the market downtrend was a strong Gulf hurricane. As the Minerals Management Service tallied more than 4 Bcf/d of shut-ins Tuesday caused by Category 4 Hurricane Ivan, these prognosticators appear to be right on.

After Ivan made another minor path change that puts it inline for a central Gulf impact, the October natural gas futures contract broke above the $5 level for a second day in a row before sliding lower to settle at $4.928, up 7.8 cents on the day. The trading range for the session was $4.82-5.01.

Ivan’s intended path has been difficult to predict as the hurricane has made more than a half dozen adjustments over the last week (see related stories). Steve Blair of Rafferty Technical Research in New York likened it to a “Crazy Ivan,” a U.S. Naval term used for a submarine that makes drastic direction changes made famous in Tom Clancy’s “The Hunt for Red October.”

Blair said it appears that the hurricane premium is for the most part already priced into this market. “From here, the only thing that may further influence this market to the upside as far as the hurricane is concerned is if Ivan takes longer to get up through the Gulf,” he said. “I think the market has priced in a certain amount of time for shut ins. If this thing slows down, each extra day of shut in production could move us further to the upside.”

Commenting on the resistance encountered at the $5 level for the second day in a row, the broker noted that every time you approach a dollar level, there is a psychological resistance attached. He added that he wouldn’t be surprised if the $5.08 level tested Monday might be the extent of the upside for now, barring a change for the worse concerning Ivan.

Commercial Brokerage Corp.’s Ed Kennedy agreed that it appears production losses already have been factored into the futures market. “What we need now is verification on damage to the rigs in the Gulf, yea or nay, one way or another,” he said. “If there is no damage, we’re going back down.” He added that the market should know the answer to that question on Thursday or Friday.

“If you close above $5.08, then we are off to the races. However, the only way we are going to do that is if there is damage,” Kennedy said.

All but forgotten in all of the hurricane hoopla of the past few weeks is the country’s storage situation. The Energy Information Administration will release its natural gas storage report for the week ended Sept. 10 at its regular 10:30 a.m. (EDT) time Thursday morning.

Allowing that Thursday’s EIA storage report may get lost in the shadow of Hurricane Ivan attention, Tim Evans of IFR Energy Services said he is calling for an 80-90 Bcf injection, which he believes would be neutral-bearish for the market.

Kyle Cooper of Citigroup said his final estimation on the storage report is for a build between 83 and 93 Bcf. “Our initial estimation was lowered slightly primarily due to data from the West,” he said. “Data would indicate a much smaller build out West than in recent weeks.” He noted that this report will include the Labor Day Holiday.

Whatever the storage injection might be, it will be closely compared to last year’s 101 Bcf build and the 81 Bcf five-year average injection.

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