Hurricane, Energy Futures Boost Cash Market

Amid concerns about the potential track of Hurricane Keith and with help from strong natural gas, crude oil and heating oil futures, cash prices emerged from a generally softer weekend to register widely varying gains at nearly all points Monday.

Flat to mildly softer numbers at Northern California and Pacific Northwest points and a decline of about a dime at Sumas were the major exceptions to increases that hit double digits at many points elsewhere and were especially strong in the Rockies and San Juan Basin. The cessation of Northwest's entitlement for the northern half of its system (see Transportation Notes) went a long way towards bringing Sumas and domestic prices back to near-parity. After the Sumas premium had gapped to slightly more than a dollar a little more than a week ago, the two Northwest points were back to less than a dime apart Monday as domestic quotes rose about 25 cents.

Keith kept everyone guessing as it moved very little off the coast of Belize, where it was pouring torrential rains into the Central American nation. In the afternoon the hurricane began drifting slowly westward, the National Weather Service said, and was expected to take a northwestward turn today, which would take it over Mexico's Yucatan Peninsula. Assuming the land trek doesn't sap its winds too much, Keith likely will re-strengthen once it hits the warm waters of the southern Gulf of Mexico.

Other than keeping an eye on Keith and energy futures, as of Monday a Houston-based source saw a "very lethargic October physical market, [with] no personality whatsoever." Traders were avoiding picking up the phone because they didn't want to hear that gas was getting returned to them, he said. Delivered-area markets, especially in the Northeast, were very weak today, making it hard to cover transport costs from the Gulf Coast. At one point Transco's Zone 6-New York City pool was priced barely 30 cents over Henry Hub, he noted.

Saying it had been "brutally difficult" to place gas at the Chicago citygate over the weekend, a marketer had no problems selling for today's flow. Weather in Chicago is so mild right now that the demand dropoff associated with a weekend is especially noticeable, she explained.

But while the major market areas of the Midwest and Northeast have virtually no weather load at this point, that is due to change by the end of this week. Both will see temperatures dropping significantly around Friday, sources said. "We should start getting some pretty decent heating demand about that time," another Chicago trader said.

The 609 MW Unit 1 at Niagara Mohawk Power's Nine Mile Point nuclear plant near Syracuse, NY, was shut down manually Monday morning after the unplanned opening of a reactor relief valve. There was no release of radiation, the utility said. That brought to six the number of nuclear units totally shut down in the Northeast, not counting several other partial outages.

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