“Storm hype” just doesn’t seem to have the old price punch it used to. For the second week in a row the industry is seeing prices get substantially softer even as a hurricane heads into the Gulf of Mexico (GOM) production area. To be sure, the fact that the projected track of Hurricane Ike had been shifted more to the south — and thus farther from offshore infrastructure — was a major factor in prices dropping across the board Tuesday.

But despite support from a prior-day rise of 7.8 cents by October futures, other bearish influences were in play Tuesday for the cash market. While cooling load is ranging from average to subpar for early September in the southern tier of states, it’s downright anemic to nonexistent in the rest of the U.S. Temperatures are getting chilly enough in some areas to prompt the firing up of furnaces, but not nearly enough to offset the lack of overall cooling load that could normally be expected at this time of year.

And traders have been quite comfortable with the pace of storage refills for some time now.

Even with Florida Gas Transmission keeping an Overage Alert Day in place Tuesday and further tightening the tolerance for negative imbalances (see Transportation Notes), Florida Gas Zone 3 and the Florida citygate took the biggest tumbles by far — about $2.30 and nearly $2.25, respectively — as highs in Florida were forecast to get no higher than the mid to upper 80s Wednesday.

Otherwise declines were more subdued in ranging from about C15 cents (Westcoast Station 2) to a little more than 65 cents.

As expected, reported GOM shut-ins due to Hurricane Gustav bottomed out Monday and were starting to rise again due to the approach of Ike. Based on reports received from 65 companies by 11:30 a.m. CDT, Minerals Management Service (MMS) said 4,795 MMcf/d of offshore gas was shut in Tuesday. That was up only slightly from the 4,748 MMcf/d reported Monday, but the volume is expected to keep growing through the rest of the week. MMS said the number of evacuated drilling rigs nearly tripled to 44, but its Tuesday tallies on oil outages and evacuated platforms were down from Monday.

What had seemed like a crowded Atlantic tropical scene with four named storms co-existing at one point last week has dwindled to a lonely Ike.

While the National Hurricane Center’s (NHC) most-likely projection of Ike’s path had it pointed toward the Houston-Galveston area on Texas’ upper coast Monday, on Tuesday the tracking had shifted toward a more southerly and westerly course that would have the storm coming ashore in the vicinity of Corpus Christi around Saturday morning. GOM operations would not escape unscathed from such a path, but it would be much less dangerous than the previously expected scenarios. Nevertheless, offshore operators continued to take workers ashore and prepare for new (or renewed) shut-ins Tuesday (see related story).

Ike cleared the western end of Cuba Tuesday afternoon and emerged into the southeastern GOM as a Category One hurricane — just barely. NHC reported maximum sustained winds of 75 mph, which were just above the 74 mph threshold for hurricane status.

The idea behind price softness despite a threatening hurricane seems to be that all the new production from onshore shale plays — Barnett, Fayetteville, Haynesville, etc. — is making up for GOM losses much better than back during the Katrina-Rita period, one source said. Also, he noted, the Gulf accounts for a significantly lower percentage of total marketed gas production now than it did in 2005.

A Midwest utility buyer said it’s good to see the hurricane take a less threatening course, but cautioned that “it’s still early yet” on where Ike actually goes. He said overnight area lows in the 40s lately are somewhat premature for cold weather to appear, but he considered the event “a flash in the pan” and not necessarily indicating an early start to a severe winter. Local temperatures are already due to start getting milder again Wednesday, he said.

In a couple of weeks his company will be ramping up gas volumes to satisfy agricultural load for drying corn, the buyer continued. That’s always a profitable period for Midwest utility throughput each year, he said.

Analysts have been advising that because of last week’s major GOM shut-ins caused by Gustav (and to a lesser degree the ones reported in the Rockies due to a major reduction of REX takeaway capacity this month), the industry can expect a significantly smaller storage injection report this week compared to the large ones during August. Tim Evans of Citi Futures Perspective said he’s looking for builds of 55 Bcf, 60 Bcf and 75 Bcf during the weeks ending Sept. 5, Sept. 12 and Sept. 19, respectively. Each volume would be less than the comparable five-year average injection, Evans noted.

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