As expected (see Daily GPI, Oct. 21), all of the cash market succumbed Friday to a bearish storage report, prior-day futures weakness, a dearth of weather-based demand and a weekend slump in industrial load. Price drops ranged from about 20 cents to more than a dollar. The biggest declines were concentrated in the Midcontinent and West.

In a potentially ominous development, the recovery of lost Gulf of Mexico (GOM) supplies from Hurricanes Katrina and Rita suffered a setback. With 68 companies reporting to it, Minerals Management Service (MMS) said it counted 5,336.87 MMcf/d in GOM shut-ins Friday — up 141.30 MMcf/d from Thursday’s level. The MMS tally of evacuated platforms was up by only one to 211 (because the restaffing of facilities in the western Gulf slightly more than offset increases in eastern Gulf evacuations), but evacuated mobile drilling rigs rose from five to 16.

The bump back upward Friday meant that shut-ins had fallen only about 310 MMcf/d from the previous Friday, compared to a 794 MMcf/d drop in the previous week.

However, one source saw the reversal of declining shut-ins as a fleeting event that should start to turn the other way early this week. It was obvious that producers in the eastern Gulf were following the old adage of “better safe than sorry” and continuing to remove nonessential workers while shutting off some gas flows (see related story) purely as a precaution even though Hurricane Wilma was still projected to head east for southern Florida over the weekend after mauling Mexico’s Yucatan Peninsula Friday and Saturday, he said. Some hurricanes in the past have become notorious for veering away from expected paths, he noted.

It was becoming somewhat doubtful whether Wilma would cause as much demand destruction early this week as previously thought, the source continued. The National Hurricane Center’s (NHC) “five-day cone” for Wilma’s expected tracking Friday had the storm headed northeastward out into the Atlantic after passing over the lower end of Florida Monday. That would keep Wilma well out to sea and having less rain on its western side to potentially dampen air conditioning load in the Southeast. After all, he pointed out, remember how Houston was largely spared when Rita made landfall well to the east just on the other side of the Louisiana border.

At 4 p.m. CDT Friday the eye of Wilma was crossing over the island of Cozumel while its northwestern eyewall was on the Yucatan coast, NHC said. It remained a Category Four hurricane with maximum sustained winds of nearly 140 mph. Interestingly, NHC noted that a National Oceanic and Atmospheric Administration buoy indicated that large swells generated by Wilma had already “propagated well into the Eastern Gulf of Mexico. These swells will likely affect portions of the northern Gulf Coast tonight [Friday].”

Although its drop of 30 cents was among the day’s smallest, Northwest-South of Green River was swallowed up in the overall western price weakness despite Saturday’s scheduled end of a pipeline outage that had prevented flows through the area for the previous two days. The Northwest point had suffered Wednesday’s biggest price drop by far of more than a dollar prior to the start of the outage.

Kern River, Northwest and Westcoast were among western pipes concerned about weekend oversupply. Kern River reported high linepack in all segments Friday; Northwest said it would declare a Stage III entitlement at 13% tolerance Saturday if it experienced excessive banking; and effective Saturday Westcoast changed its imbalance tolerance range to 20% pack and zero draft from the normal 10%/10% range.

A cold front moving into much of the Midwest Friday would be lowering temperatures by five to 15 degrees below normal over the weekend, but obviously that wasn’t going to result in enough heating load to prevent regional citygates from joining the overall softening Friday. As the front spread, it was expected to have a similar effect in the Northeast but would essentially eliminate most if not all remaining summer-like warmth in the South. Meanwhile, except for a minor cold front due in the Pacific Northwest, most of the West would be ranging from mild to a bit warm.

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