The cash market finally made it unanimous. Following four days in which a few points had run counter to the prevailing trend up or down each day, all prices were moving in the same direction Friday — way down. The major softening had been predictable in light of the screen’s dive of nearly 81 cents Thursday and forecasts of moderate to cool temperatures in most areas for the weekend.

All losses were in double or triple digits, ranging from a little less than 35 cents to nearly $1.20. They also were scattered fairly consistently across geographic regions, with no market area standing out as particularly stronger or weaker than others.

Cash trading resumed at Henry Hub after an absence of two weeks that resulted from operator Sabine Pipe Line declaring a systemwide force majeure as Hurricane Rita bore down on the Gulf Coast. Sabine began lifting the force majeure for certain Hub interconnections on Tuesday, but a lack of compression due to an area power outage had hindered a resumption of trading.

Henry Hub deals tended to average around the low $13.70s Friday. On Thursday, Sept. 23, the last time the Hub was actively traded prior to Sabine’s declaration of the force majeure, it had averaged $15.27, up $1.02 for the day.

A cold front had knocked out virtually all remaining vestiges of air conditioning demand in the South by Friday. Pockets of heating load could develop with snow and/or frosty temperatures predicted in a few northern areas, but they weren’t expected to raise gas demand substantially.

The Minerals Management Service (MMS) reported 6,441.39 MMcf/d in remaining Gulf of Mexico production outages Friday. The volume was down 186.68 MMcf/d from the day before. Since the previous Friday, offshore producers had reduced shut-ins by 1.5 Bcf/d, according to MMS. However, a little less than two-thirds of the Gulf’s normal output of about 10 Bcf/d was still offline.

Although the pipeline continued to report low linepack in all segments Friday, Kern River prices dropped nearly a dollar. And the PG&E citygate was down about 75 cents even with the utility projecting linepack near its minimum levels through the weekend.

It looks like the demand destruction caused by Gulf Coast hurricanes and the long endurance of $10-plus gas pricing is finally being acknowledged by the market, a Midcontinent producer said. He reported being unable to find any market near the end of trading, when he was seeing the day’s lowest prices. A lot of offers on an online trading service were getting no bids, he said. The Midcontinent market saw little impact from the resumption of Henry Hub business, he added.

“The main demand for gas right now is storage injections,” the producer continued, and that should be drying up soon as many facilities are nearly full. He said he was not surprised to see gas quotes finally softening late last week since power prices also fall because of the transition to weather more appropriate for autumn almost everywhere.

A Calgary-based producer provided a couple of different perceptions. It was nice to see Henry Hub active again “even if you don’t trade the Gulf Coast,” he said. Having physical deals resume helped to clarify Hub-based swaps trading again, he said. Noting that “cash was pretty choppy,” the producer also said his primary trading focus — the Chicago citygate — had started near its lows and then moved higher as people found that the weekend market wasn’t quite as weak as they had expected.

The producer said there was talk of some Chicago-area heating load, but he really couldn’t detect much. To him, the utilities “were turning back less [gas] instead of ordering more” Friday. He observed that Friday afternoon’s 57 degrees “is about as high as Calgary has been for a while.”

Although there weren’t any active tropical systems in the Atlantic Friday, The Weather Channel said an upper-level low several hundred miles northeast of the Leeward Islands was worth watching for potential development.

Commenting on the futures collapse Thursday following the storage report, Citigroup analyst Kyle Cooper said, “The [end-of-day] price level is still over 30% higher than any Nymex close prior to the last few weeks. Weakness is relative as absolute prices are anything but weak…I do not think these price levels are sustainable and at some point expect prices to trade well below $10. However, realistically, I don’t know if that will happen in 2005. While it may seem absurd, a $10 price range is considered probable over the next few months. An early cold snap with a large [storage] draw in early November and prices of $20 may happen. Follow that with serious conservation at the residential level, a return of offshore production and Mother Nature turning bearish, [and] prices could be right back down to $10 by Christmas.”

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