Pulled higher by the momentum in the futures market and some lingering effects of the 2.1 Bcf/d in temporary production curtailments in the Gulf of Mexico late last week because of formerly Tropical Storm Hanna, cash prices bounded 10-20 cents higher Monday and ended on a relatively strong note at most locations outside the Rockies.

Hanna finally made landfall Saturday at about 10 a.m. near the mouth of the Mississippi, and by Monday gas pipelines and the Mineral Management Service reported operations were nearly back to normal. Destin Pipeline, which had suffered some of the largest reductions among the pipelines of about 550 MMcf/d, reported that throughput had nearly returned to about 750 MMcf/d compared to the 850 MMcf/d flowing prior to the storm. Florida Gas Transmission and Texas Eastern Transmission said their throughput returned to normal on Saturday. FGT had reported 150 MMcf/d of curtailed production, and Tetco said 160 MMcf/d was shut-in because of the storm. No platform damage was reported. Tetco said nominations from the affected areas (North and South Pass) rose back up to 320,000 Dth/d on Monday.

The MMS said at total of 2,120.4 MMcf/d of gas production was temporarily curtailed and a total of 190 platforms and 28 rigs were evacuated. About 325,910 bbl/d of oil production was shut-in briefly, according to the MMS.

Meanwhile, the National Weather Service said Monday that reports from a hurricane hunter aircraft indicate the tropical system east-southeast of Jamaica in the Caribbean does not have a closed circulation, but does have some tropical storm force winds and has the potential to become a depression or storm in the next day of two.

Market participants said prices moved sharply higher Monday in response to the lost supply and in reaction to strengthening futures. Henry Hub started in the low $3.40s and ran up to $3.50 from averages in the mid-$3.30s on Friday for weekend flow. “There seems to be definitely strong upward pressures in this market,” reported one utility buyer. “Financial players are having more of an impact than actual fundamentals anymore. I think we [utilities/storage holders] have no control over pricing. When Nymex moves up, cash prices move up. But when Nymex falls, cash prices don’t seem to follow.

“We continue to inject gas in the storage field everyday, and we definitely know we are going to fill the whole field up,” he said. “We already have a ton of gas in the ground, but it doesn’t make any difference. People just have it in their heads that production is down and prices have to go up. If we have a mild winter and finish the winter with a ton of gas in the ground, next spring they will say ‘production is off so you’re not going to be able to fill your field up over the summer.’ It’s always something else.”

He reported Transco New York at $3.78-82 but the range was from the low $3.70s to low $3.90s compared to $3.50 to $3.66 on Friday. Transco Station 65 rose to the high $3.50s from the mid $3.30s on Friday. Other Transco points were up about 15 cents.

“People keep saying that there should not be that much demand with mild temperatures in the Northeast and storage nearing full. However, between strength in Nymex pricing and some nuclear outages, Northeast prices have reason to move higher,” said another source, noting that the Millstone 3 and Peach Bottom 2 nukes in the Northeast were both completely off line, taking more than 2,200 MW of generation capacity off the market.

“Take Tetco M3 for example. It traded right at or slightly above the cost to transport gas from the Gulf. With Tetco ELA trading in the mid- to upper- $3.30s and the variable cost of transport at roughly 39 cents, this equated to M3 prices in the high $3.70s to low $3.80s.”

In the Midwest, Chicago prices were up more than a dime to the mid $3.40s, while Dawn quotes rose less to the low $3.50s. “Dawn has been lagging,” said one marketer. “The Vector spread has been worth about 6-7 cents in the daily market. There was a small heat wave earlier in the month in Chicago that was taking all the gas off of Vector, and Dawn storage also has been getting pretty full.

“There’s just too much liquidity in Chicago. No one needs to move it up to Dawn anymore, and there’s some cheap gas coming across TransCanada to Dawn. Lack of players doesn’t help you there. Dawn liquidity has slipped substantially,” she added. “People can’t put on the positions anymore with the Aquilas of the world gone. Dynegy was a big player at Dawn, but they aren’t doing that anymore. That’s the case at a lot of points. Duke is holding off and is taking a midterm hiatus from the market. We have about six strong counterparties that we rely on now at Dawn. That’s very low compared to a year ago, but it’s becoming pretty average for many second tier locations.”

In the Rockies and Southwest prices also were on the rise Monday with San Juan shooting to as high as $2.55, from around $2 on Friday for weekend deliveries. “Prices had been depressed last week at times because of maintenance, but it appears to be back to normal,” said one utility buyer. “It’s about at index levels right now. We’re kind of thinking it will come off because demand is going to ease up as we get into late September and October. It’s still 100 degrees in Arizona, but it’s now going down in the 70s at night as opposed to the 90s, and it will get even cooler. We’re certainly on the back end of the summer.”

Opal prices shot up to the high $1.30s but came back down to around $1.05 near the end of the session, said one producer. “We should stay weak for the rest of the month,” he said. “I think we are going to stay in the $1 area until something else strange happens. I can’t see us rallying. There’s just a lot of gas every day on the market. Opal has to stay down because once it starts going back up production comes right back in to meet it. There’s quite a bit of shut-in gas right now.”

Prices in Canada also were strong in response to futures and continuing work at Duke’s Fort Nelson plant, which is holding about 400 MMcf/d off the market, said a marketer. Sumas, Station 2 and Alberta prices were all up about 10-20 cents.

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