With Gulf of Mexico (GOM) production starting to ramp up again after Hurricane Dennis proved to be just as much a hit-and-run storm as predecessors Arlene and Cindy (see related story), traders sent prices lower, mostly by substantial amounts, at nearly all eastern points Monday. The West was more of a mixed bag, with several instances of flatness bracketed by gains as large as nearly 20 cents and losses of up to about 20 cents.
Eastern declines ranged up to nearly a dollar as Dennis’s impact on Gulf of Mexico supplies — while huge in comparison with Cindy’s — looked to be fading almost as quickly. Also, Dennis was helping to squelch air conditioning load in the Southeast and Ohio Valley with its flooding but cooling rains and its power outages.
To be fair, only one point — Florida Gas Zone 3 — saw the near-dollar plunge. Other losses were capped at around half a dollar.
Dennis had been reduced to a tropical depression in the vicinity of Dyersburg, TN, by Monday afternoon, according to the National Hurricane Center (NHC), which said it was issuing its final Dennis advisory (although updates on Dennis were still being posted that afternoon on the NHC website by the Hydrometeorological Prediction Center). The agency reported that flood and flash flood warnings were in effect Monday afternoon for parts of Alabama, Georgia, South Carolina and Tennessee, while flood and flash flood watches were in effect for other parts of the same four states and also in portions of Illinois, Indiana, Kentucky, Missouri and North Carolina.
Minerals Management Service (MMS) said that with 55 companies reporting to it by 11 a.m. CDT Monday, it counted a whopping 6,236.6 MMcf/d of gas and 1,443,655.3 bbl/d of oil as shut in because of Dennis. That represented 62.4% of normal GOM daily gas output and a somewhat incredible 96.2% of its usual oil production, MMS said. Rumors circulated that the oil statistics might be challenged, since some could hardly believe that close to all oil output had been lost when the hurricane came nowhere near offshore Texas and southwest Louisiana.
By comparison, Cindy-related outages peaked at a little more than 750 MMcf/d last Wednesday, and MMS cut that figure by more than half on the following day, the last one on which it released shut-in statistics for Cindy.
Meanwhile, don’t look now but Tropical Depression Five (TD5) is on its way — albeit a long way. At 5 p.m. Atlantic Standard Time, the center of TD5 was about 1,030 miles east of the Windward Islands (the southern half of the curving island chain between Puerto Rico and Venezuela). It was moving toward the west at nearly 14 mph, poising it for a likely run between the large Caribbean islands of Jamaica, Hispaniola (Haiti and Dominican Republic) and Cuba and the South America/Central America coasts. Although not well organized, the depression had the potential for becoming Tropical Storm Emily over the next 24 hours, the NHC said.
Some western points saw modest strength Monday as they rebounded from Friday’s softness and were freed from the negative price effects of weekend OFOs by California’s two giant distributors (see Transportation Notes). In addition, temperatures will be well above seasonal averages Tuesday in most of the interior West, The Weather Channel said.
A Gulf Coast producer reported that “slowly but surely” his company was turning its offshore flow valves back on, and it expected to have all shut-in production back by Wednesday. “We had some supply shortfalls [on purchases from other suppliers] Sunday and Monday,” he said, but it looked like everything was good for Tuesday.
Gulf Coast-Northeast basis spreads were getting closer to normal Monday at around 40 cents or so, depending on the points, after getting squeezed to almost nothing in some cases Friday, the producer noted. He theorized that the minimal basis occurred Friday because some people were buying up Gulf Coast gas at premium prices Friday because they weren’t sure what would be able to flow.
Observing that relative market calm was setting in again after a hectic week of storm-related volatility, the producer counseled, “Enjoy the rest while we can.” TD5 is coming along and could become a tropical storm by the time traders return to their offices Tuesday.
Citigroup analyst Kyle Cooper said his initial estimation for the upcoming storage report calls for a build in the mid 90s Bcf.
©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |