With Hurricane Ivan now seriously threatening Gulf of Mexico production, natural gas futures jumped off the charts Monday morning in preparation for the possibility of prolonged natural gas and oil rig shut-ins.

After gapping higher at the open, the October futures contract hit a $5.08 high on the day at 10:40 a.m. on news over the weekend that the hurricane’s path had changed yet again. For the remainder of the session, the prompt month trickled lower to close at $4.85, still gaining a whopping 28 cents on the day.

Instead of riding the west coast of Florida down to landfall in Tallahassee, it now appears that Ivan will wrap around Cuba through the Yucatan Channel and impact the eastern and central Gulf, without crossing any hurricane weakening land masses. As a result, the storm could stay at or near its Category 5 classification, with maximum sustained winds remaining near the current 160 mph.

Producers are taking the hint. Most of the central and Eastern Gulf saw widespread evacuations and some shut ins on Monday (see related story).

The National Hurricane Center (NHC) said that Hurricane Watches might be required for portions of the north central and northeastern Gulf coast later Monday night. The center added that a Tropical Storm Watch remains in effect for the Florida Keys from the Seven Mile Bridge westward, including the Dry Tortugas. As of 5 p.m. (EDT), Ivan was 30 miles south of the western tip of Cuba, moving toward the north-northwest at near 9 mph.

While allowing that the futures market responded to the changed path in Sunday night Access trading and Monday’s regular session, Tim Evans of IFR Energy Services said later updates from some forecasters suggest that Ivan may now curl far enough to the east to make landfall along the Florida Panhandle instead. However, he noted that Ivan is a big storm that will warrant a range of production shut-ins. “Ivan is likely to dominate the price action for at least the balance of the week, and maybe around next week’s DOE report too,” he said.

“October natural gas has certainly hit some resistance at today’s $5.08 high, and it will take a second effort push beyond that level to spark a run for the failed support at $5.39-5.43 or the $5.75 highs from mid-August,” Evans said before Monday’s session close. “A close above the $4.84 level or certainly above the $4.895 high from last week would help maintain a positive tone to what has become a volatile advance.

Evans said he sees additional support at $4.71 now ahead of the $4.56 floor from last week, which takes on “greater importance” now due to Monday’s spike. “On the downside, a break would target the $4.39-4.40 spot lows from September-October 2003, followed by the $4.00 psychological support and the $3.74 spot low from November 2002, if the bearish storage trend remains intact, translating into a further downtrend in price,” he added.

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