A few isolated flat points were in the mix, but the overall cash market fell again Monday between a nickel and about a quarter as weather-based load remained elusive for natural gas, and Gulf of Mexico shut-ins, while still at a high level, had already lost their price-boosting effects since the middle of last week.

With the continuing loss of offshore production having been accommodated by cash traders, no new storm threats in the Gulf and generally benign weather forecasts, little chance is seen for any substantive price rallies in the near future. One source, noting that the National Weather Service has predicted above normal temperatures for most of the U.S. this week (see Daily GPI, Sept. 23), pointed out that as September transitions into October, that just means a lack of cold early-autumn weather rather than any sizeable increase in cooling load.

The screen also provided a negative sign for cash, falling another 13 cents Monday after Friday’s dip of 17.2 cents. The lack of connection recently between the natural gas contract with Nymex’s oil-related energy offerings got even more obvious as crude oil recorded its all-time highest daily settlement ever by rising 64 cents to $49.64/bbl, and that was after establishing a new intraday record at $49.75. In addition to all the global upsets to crude supplies in recent months, such as infrastructure violence in Iraq and Nigeria and the financial problems of a major Russian exporter, oil traders reportedly expect the government to announce another major drawdown in domestic inventories Wednesday due to the offshore shut-ins prompted by Hurricane Ivan.

(In after-hours trading crude for November delivery hit the key psychological level of $50 in what a Reuters news story said was reaction to Nigerian rebels declaring that they would begin “all-out” war against the nation’s government starting Oct. 1.)

The total of shut-in gas in the Gulf of Mexico being restored to production nudged only barely higher over the weekend. With 23 companies reporting to it, Minerals Management Service said 2,346.91 MMcf/d remained shut in as of 11:30 a.m. CDT Monday, or not quite 10 MMcf/d more than the 2,356.43 MMcf/d counted on Friday. The federal agency said cumulative shut-ins from Sept. 13 through Monday totaled 50.042 Bcf, or 1.125% of yearly Gulf output of about 4.45 Tcf.

Former Hurricane Jeanne had weakened to a tropical depression as it moved north-northeast Monday through Georgia toward the Carolinas. It left reduced power generation load for gas behind it in the form of electric outages in Florida and threatened to cause more demand destruction as it proceeds on an anticipated tracking up the East Coast. The National Hurricane Center said it would issue no further public advisories on Jeanne following Monday’s 2 p.m. EDT posting.

Ivan caused so much production damage that “I don’t think people realize yet how extensive this is,” said a Gulf Coast marketer. At least the spot market is returning to some semblance of normality now, he continued, noting that the first few days after the storm struck, his company was seeing significant nonperformance “as suppliers sold gas they did not really have” due to processing plant outages, pipeline leaks or whatever. Lately, though, he hasn’t had any trouble finding replacement gas, “even with virtually all of our Sonat supplies under force majeure,” the marketer said.

A Calgary-based producer, who reported an October sale at Sumas in the mid $4.50s Friday, said he did no new deals Monday but was hearing bidweek prices about a nickel lower. He observed that Alliance Pipeline “has been pretty well integrated into the Canadian market in the last year,” saying that now traders of Canadian gas were seeing fairly stable Alliance pricing in relation to Aeco and Westcoast Station 2 numbers.

A Gulf Coast trader agreed that October fixed prices fell a few cents Monday while basis got a little tighter, both of which he attributed to the screen decline. He anticipates a good chance for more October price weakness before bidweek is completed Thursday.

A Midwestern utility buyer reported doing deals at Northern Natural’s demarcation and Ventura points Monday at index minus 7 cents and minus 7.5 cents respectively. He also did a demarc basis purchase at the last-day settlement minus 44 cents, and got a fixed-price offer of $4.77 at demarc. The buyer added that his utility has experienced such relatively little weather load this year “that we started hoping for a much colder winter, but now are hearing it will be mild.”

Lehman Brothers analyst Thomas Driscoll said he expects a storage injection of 70 Bcf to be reported for the week ended Sept. 24. He went on to estimate that the impact of Hurricane Ivan will reduce natural gas production by a total of 80-120 Bcf. “We believe the impact was about 20 Bcf in the week ended 9/17/04, [and] we estimate about another 20 Bcf will be lost in the week ended 9/24/04, and a remaining 1-2 Bcf/d will be lost over the remaining six weeks of the refill season,” Driscoll said.

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