Tropical Storm Disrupts Gulf, But Price Impact Minor
Tropical Storm Frances stuck around last week in the Gulf of
Mexico longer than Hurricane Earl had the week before, but her
market impact was just as fleeting. At first some people didn't
accord Frances much importance at all, as prices softened slightly
Wednesday even while Frances was strengthening to named tropical
storm status. A Houston marketer practically sneered in dismissing
it as a "rain storm" that would be short-lived. Price impact would
be light because "there is not that much production down that far"
off the southern tip of Texas, where Frances staked out a position
and stayed there for almost three days.
However, such doubters were being won over Thursday as it became
obvious Frances was causing significant production shut-ins along
the Texas and Louisiana coasts. It was the disorganized nature of
the storm that spread its influence as far east as New Orleans,
which experienced significant flooding. Cash numbers were rising
around a dime or more at many points as a dime-plus Nymex screen
run-up helped pull up prices in areas not affected by the storm
outages. However, those increases fell far shy of the ones of a
quarter or more generated by Earl on Sept. 1.
But just as Earl's spikes fell by the wayside after just one day
of firming, so did those of Frances. Although NGI was able to come
up with a seriously understated production outage figure of more
than 2.6 Bcf/d as of Friday morning, new prices in eastern markets
were flat to down a nickel or so. (The outage figure was incomplete
because volumes for several pipes were either unavailable or the
pipeline representatives in downtown Houston were unable to get to
work due to heavy street flooding.) "Everyone was dispatching
[nominating] for the weekend as if production would be back up over
the weekend," a Gulf Coast marketer said. However, he predicted
many would be coming back today facing big imbalances.
Roger Tanner, Houston
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