The October aftermarket opened on a heavily bullish note at eastern, southwestern and California points Monday with cash prices shooting up between about a quarter and a little more than 50 cents. However, Rockies numbers were flat to down as much as 20 cents, one source said. Lili officially became a hurricane — the fourth of the 2002 Atlantic season — Monday morning and was staying on a track similar to the one that Isidore followed before it caused widespread production outages in the Gulf of Mexico last week.

Some producers reportedly were starting to shut in offshore production again Monday even before the losses from last week had dissipated. One news story quoted a Shell Oil spokeswoman as saying 200 non-essential workers already had been taken off platforms and that more would be evacuated later Monday. Shell was producing 1.9 Bcf/d out of its total Gulf capacity of 2.7 Bcf/d, she said.

The federal Minerals Management Service said its tally of curtailed offshore production had dwindled to slightly less than 1.166 Bcf/d Monday, down from 6.399 Bcf/d on Friday. The count of evacuated platforms and drilling rigs was down to 47 and 12 respectively. Ten companies reported the remaining outages, MMS said, while another 17 told the agency they were experiencing normal operations again.

A marketer cited “that little swirly [Hurricane Lili] out there” and concerns that it will cause another major disruption in offshore supplies as the chief reason for Monday’s general price strength. Any outages would come only a week after Tropical Storm Isidore forced the shut-in of up to 8.5 Bcf/d at one point, according to MMS.

The marketer also said cash gas got some support from a screen rise of about a dime while swing trading proceeded, noting that continuing tensions over a potential U.S. war with Iraq were keeping crude oil numbers firm. “Other than that, there’s really no reason for prices to have soared like they did” with weather fundamentals remaining basically weak, he said.

“All the out months and winter strip [on the Nymex natural gas screen] were really strong,” he pointed out. The marketer went on to speculate that some people “may have been caught on the short side and were balancing their first-of-month needs,” an action that would have given an extra boost to an already strong eastern market. He remarked that except for the price spikes, “it was a very quiet trading session.”

A marketer quoting the Gulf Coast’s highest field prices in the mid to high $4.20s at Florida Gas Transmission Zone 3 said a lot of supply was still out on Destin Pipeline, giving FGT Zone 3 a significant premium. He and a Florida utility buyer reported citygates in the mid $4.70s, keeping it the most expensive point in the market.

Predictably, utility buyers were not happy about what they called “storm hype” price gains. One in the Northeast said the region’s mild weather “doesn’t justify these kind of price spikes,” and they must have been based entirely on storm fears in the Gulf. And a Southeast buyer commented that there was too much uncertainty over supplies last week, and she didn’t look forward to another round of it at all. “It sure isn’t any fun trying to buy gas during periods of big Gulf of Mexico shut-ins,” she said, but if you offer somebody enough money, they’ll usually manage to come up with the supply somehow.

A marketer confessed to helping drive up Monday’s numbers by getting caught short. “But we decided to pay the piper in installments over the course of the month, rather than in a large bidweek down payment,” he said. “If Lili picks up the pace and prices don’t come down some, we will really be hurting. It’s a position we didn’t want to have, but what were you to do. The prices Friday were outrageous and they weren’t any more reasonable Monday.”

A Gulf Coast producer said he was not having nearly as big a problem with offshore outages Monday compared with last week, “but we’re expecting to have to start dealing with supply cuts again in Wednesday’s trading for Thursday flow, and possibly as early as Tuesday.” He noted that Lili was moving pretty fast and not showing much inclination to go lose some strength over Mexico’s Yucatan Peninsula, as Isidore Izzy did.

In its system status report Monday, Northwest said that as of Saturday its Jackson Prairie storage facility was officially full at 19,527,422 dekatherms of total inventory.

As a reminder of the winter heating season being not too far off, a Calgary trader reported that the city was getting several inches of wet snow Monday. Intra-Alberta prices rose nearly C25 cents into the low to mid C4.70s.

Noting the large amount of production lost last week and some storage withdrawals to make up the shortfall, one trader expects the EIA storage number “will be might low this week,” possibly down to a 10-20 Bcf injection. Thus he expects prices to stay strong “at least for a while.”

At 11 a.m. EDT the National Weather Service reported Lili’s position as about 175 miles southeast of Cuba’s Isle of Youth. It was moving toward the west-northwest at nearly 10 mph, a motion that was expected to continue over the next 24 hours with some increase in forward speed. The center of Lili was likely to be near the Isle of Youth Tuesday morning, with the hurricane passing over the western end of Cuba and into the Gulf of Mexico as the day progresses, according to NWS.

Hurricane warnings had been issued for all of the Cayman Islands and for the Isle of Youth and four Cuban provinces, while tropical storm warnings were in effect for the rest of Cuba.

Observing how little October business had been left for completion Monday, a producer said, “It’s getting so that if you don’t have your book cleared by the time of the [Nymex] settle, you can get yourself in trouble because there really is almost nothing done after the settle.”

A marketer, saying he didn’t do any October deals Monday, added, “If anyone was out looking, they got punished” on the price.

A couple of sources explained their bullish price outlooks to NGI . According to one, “Sure, storage is nearing full and we are at a surplus to both last year and the five-year average. But what people fail to realize is that we started the injection season from a much higher level. Check your own figures to be sure, but the last time I looked we had only injected 1.7 Tcf this year versus 2.3 Tcf last year. That is evidence of the shortfall in supply that everyone is talking about. If we have even a normal winter, we will draw down storage to a much lower starting point next April. Now that is bullish.”

The other source said, “Timing is really going to work against this market. With these late storms, the market is not going to have a chance to take a breather before the cold weather hits in November.”

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