A previously divided cash market came together for an impressive show of unity Tuesday as NGPL’s TexOk zone was the only point to show a decline (a little less than a dime). Prices were flat to higher in the rest of the market, deriving support from the previous day’s increase of 13.7 cents by October futures and further indications that ongoing outages of significant amounts of Gulf of Mexico (GOM) supplies are having more of a price impact as they continue to accumulate.

Virtually all points ranged from flat to up about 65 cents. The Midcontinent and San Juan Basin tended to see most of the largest upticks.

Cash numbers will have even greater futures support Wednesday as the October natural gas contract, in a disconnect from a skidding petroleum products market (November crude took over as the prompt month Tuesday after October expired in a blaze of price fireworks Monday), jumped 27.3 cents Tuesday (see related story).

It’s almost a certainty that without the supply shortfall from offshore due to hurricanes Gustav and Ike, the cash market would be steadily eroding. Southern weather continues to be milder than usual for late September, especially at the region’s southern end, he pointed out, and while much of the Midwest and Northeast is experiencing chilly overnight lows, it isn’t enough yet to translate into meaningful heating load.

Conditions are moderate to cool in most of the West, with low 100s highs in the Phoenix area of the desert Southwest and peak temperatures on either side of 90 in interior California constituting the region’s last remaining significant weather fundamental.

The heat-based load inland likely was why Malin and the PG&E citygate were able to shrug off a high-inventory OFO by PG&E (see Transportation Notes) and record gains of a little less than a nickel each.

The plodding pace of restoring shut-in GOM production continued, with Minerals Management Service saying 63 companies reported 4,560 MMcf/d of remaining gas outages Tuesday, down 289 MMcf/d from a day earlier. The agency also said oil shut-ins in federal waters had declined to 868,654 b/d and evacuations of platforms and mobile drilling rigs were down to 203 and four, respectively (see related story).

“With all the flooding in Missouri, it could have been worse,” was a Rockies producer’s comment to the news that Rockies Express expects to reopen its ANR delivery point in Kansas as scheduled after a lengthy hydrostatic test of a downstream line section, but restoring service at the Panhandle Eastern interconnect in Missouri might be delayed until Oct. 1 (see Transportation Notes).

Prices were trending higher as morning went on, said a Houston-based marketer, so that combined with the strong gain at Nymex should ensure a firmer spot market again Wednesday. He thought the market must be feeling a bit more squeeze than before from the offshore supply outages, noting that there’s still very little weather-based demand to cause higher prices. You might as well blame heavy rush-hour “traffic on U.S. 290,” a frequently congested Houston freeway, for Tuesday’s higher numbers instead of the weather, he joked.

His company is having some issues on ANR, he said, but otherwise transportation is fairly smooth, especially considering the remaining Gulf Coast infrastructure outages.

The marketer said he and colleagues “traded from homes or wherever we happened to be” in the first two days of last week, but got to return to their regular trading desks in west Houston Wednesday after the power got restored there. The lights were still off Tuesday at his house, though, he noted.

The National Hurricane Center is now rating a low-pressure area near the eastern Dominican Republic as having high development potential. The main gas market effect, however, is still expected to be potential demand destruction along the East Coast, as models continue to project the system’s path as mostly northward along the coast or possibly remaining out in the Atlantic.

The National Weather Service’s six- to 10-day forecast for the Sept. 29-Oct. 3 workweek calls for below-normal temperatures everywhere east of a line from the eastern edge of Michigan running southwestward to eastern Arkansas and turning south through western Louisiana. The agency predicts above-normal readings north and west of a line that runs from the southern end of California through central Arizona and northern New Mexico before turning northeastward to encompass all of the Great Plains and the western end of the Midwest.

Stephen Smith of Stephen Smith Energy Associates said his projection Tuesday of a storage injection of 64 Bcf for the week ending Sept. 19 was down from his 70 Bcf estimate a day earlier. Citi Futures Perspective analyst Tim Evans expects a considerably larger build of 85 Bcf for the week ending Sept. 19. Evans also projected the continuation of big injections, predicting additions of 96 Bcf and 87 Bcf for the weeks ending Sept. 26 and Oct. 3, respectively.

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