Showing that significant screen weakness on the previous day is not an automatic harbinger of subsequent softness in cash numbers, prices ranged from flat to as much as 65 cents higher at nearly all points Tuesday despite a natural gas futures loss of nearly a quarter on Monday. A few Gulf Coast points softened by as much as a dime in exceptions to the overall market strength.

Florida Gas Transmission’s production-area zones saw Tuesday’s biggest increases as the pipeline tightened the negative imbalance tolerance for an OFO-like restriction to a relatively stringent 10% (see Transportation Notes).

Florida was not the only market area seeing sizeable air conditioning load. Highs in the low to mid 90s were predicted for Wednesday across much of the southern third of the U.S., although rain from Hurricane Ophelia was due to keep the Carolinas coastal area fairly mild. However, a cold front was forecast to move into the Midwest Wednesday, and although the Northeast would stay warm for another day, that same front will be spreading its cooling activity into the Northeast around Thursday, The Weather Channel said.

The slow-moving Ophelia, an on-again, off-again hurricane that regained such status Tuesday afternoon, is expected to make landfall along the lower North Carolina coast around early afternoon Wednesday, then to move northeastward before exiting the upper North Carolina coast Thursday, the National Hurricane Center said.

Slow progress in restoring offshore production shut in by Hurricane Katrina is lending a bit of psychological support to the cash market. Only 64 MMcf/d more was online in the Gulf of Mexico Tuesday than Monday, as Minerals Management Service reported outages being reduced to 3.720 Bcf/d (see related story).

Weakness grew in October natural gas futures, which registered a decline of 26.8 cents Tuesday to surpass Monday’s drop of 23.2 cents. Crude oil for October delivery saw a modest decline while Nymex’s heating oil and unleaded gasoline offerings rose.

While noting that one can’t count on softer cash following a screen decline, a Houston-based marketer said he thought cooler weather in the Midwest would lower some prices Wednesday. However, he allowed that some markets might continue upwards. It will be in the mid 70s in the Detroit area by the end of the week, he said. His company is seeing “pretty good basis” differentials currently between the Chicago and Consumers Energy citygates and is making a little money from the cost of transport.

People are looking hard at storage buying opportunities while it’s still warmer in the market areas, the marketer continued. Even with Gulf of Mexico production being slow to recover from Katrina, it “feels” like there’s plenty of gas available in the Gulf Coast area this week, which is a big shift from last week when shortfalls were still pinching supplies, he said.

A producer who trades the Northeast said fundamentals outweighed technical factors in pushing prices higher Tuesday. At about 10 degrees above normal, it’s still pretty hot in the Northeast, he said, and although some cooling is expected later this week, next week is looking like another fairly hot one (see forecast below). Also, several large coal plants are down for maintenance or repairs in the region, so power generation load for gas remains substantive, he said. “The generators are making money with high power prices,” and in the process they’re supporting the cash gas market at the same time.

The producer commented that the slowness of restoring Katrina-related shut-ins is adding a little to cash market volatility and helping support prices. Traders realize that extended Gulf of Mexico outages are going to prevent the big storage surplus that had been expected earlier this year to be in place at the start of the winter heating season, he said.

The National Weather Service (NWS) predicts above normal temperatures in most of the central and eastern U.S. during the Sept. 19-23 workweek. Its forecast calls for above normal readings everywhere between lines running from North Dakota southwestward through central Arizona and from southern North Carolina through central South Carolina and Georgia to the coastal border between Alabama and Mississippi. The only areas where NWS expects below normal temperatures is in the southern half of the Florida peninsula, a thin sliver along nearly the entire coast of California, and in the northern sections of Washington, Idaho and Montana.

Enercast analyst Agbeli Ameko expects a storage injection of 71 Bcf to be reported for the week ending Sept. 9. “Weather markets continue to show a shorter shoulder season with prices trading warmer than average for September and early October followed by a sharp turn into cooler temperatures by late October,” Ameko said in an advisory Tuesday. “This pattern is expected to increase weather-driven energy demand over average levels over these periods, further reducing injections to finish off the season. Any short-term reduction in natural gas price is seen as a buying opportunity.”

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