Most spot market points lost 5-15 cents on Thursday in response to the National Hurricane Center’s fluctuating storm track forecasts for Hurricane Ivan, which according to the 5 p.m. EDT prediction, now is expected to run up the far eastern Gulf of Mexico, parallel to the Florida west coast, and make landfall on the Florida panhandle Tuesday night.

Earlier in the day Thursday the NHC had predicted that Ivan would make a direct hit on the tip of the Florida peninsula. On Wednesday, the forecast was for Ivan to head into the eastern Gulf more toward Mobile Bay.

Until the track of the hurricane becomes more certain, it will be hard to expect another substantial sell-off in futures. October futures prices moved up 2.7 cents to $4.658 on Thursday. “I could see a sell-off if the track was known because I do think there are some lower numbers to be realized,” said a Gulf Coast producer. “That’s all going to be post Ivan though.”

The market had little reaction to the Energy Information Administration’s report Thursday of an 80 Bcf storage injection, which was in line with expectations. “The storage number maintained the bearish slant of recent injections, but you can see that back pressures are starting to cause a little bit of a problem for those trying to sustain high injections,” said a Northeast marketer. “These fields are starting to get three-quarters full or more. You have to compress the gas to get it in, and its more of a chore to get it in when it gets closer to full.

“But anyone who can get it in is trying real hard right now,” he noted. “I’ve never in my career seen these spreads between October and January. All it’s telling you is that there are very few people who can take advantage of the opportunity.”

The January and February futures contracts on the New York Mercantile Exchange are currently more than $2.10 over the October contract, providing a massive economic incentive to put gas into storage currently. Although injections over the next few weeks are likely to fall short of the comparable 100 Bcf-plus figures last year, they still should run higher than historical averages, ensuring that working gas on Nov. 1 will be more than adequate to handle normal winter weather.

The EIA said in Thursday’s report that working gas levels in the key East region rose 50 Bcf to 1,589 Bcf, which is about 53 Bcf, or 3.5%, more than the five-year average and 103 Bcf more than levels last year. Working gas levels in the producing region rose 22 Bcf to 824 Bcf, which is 129 Bcf more than levels last year and 109 Bcf, or 15.2%, more than the five-year average. In the West, there is 362 Bcf of working gas in storage, which is 21 Bcf, or 6.2%, more than the five-year average.

In addition to strong storage injection demand currently, sources also noted healthy buying interest from power generators in the Northeast. “We’re in fuel switch mode right now. We’re seeing more demand for natural gas just because people are trying to get off of oil and save their sulfur emissions until later on into November and December — they have annual emissions constraints,” a regional utility buyer said. “For people who can fuel switch, running natural gas for September and October really helps them. Gas is now cheaper than No. 6 fuel oil. There’s also a premium that people put on saving their sulfur credits until later in the year — that way they can burn dirty if they need to and still fit inside their sulfur bubble.”

Prices fell 10-15 cents in the Northeast Thursday to about $5.05 on average, but marketers reported some decent incremental demand in the Nepool area. September and October are shoulder periods when a lot of generators preform maintenance. “Some plant flexibilities are being taken away,” said a marketer. “Gas moves up in the margin on dispatchable power.”

In Florida, utilities and residents are bracing for their third hurricane in a month and the energy market is still recovering from hurricanes Frances and Charley. Florida gas prices rose a nickel Thursday in response to sudden demand increases and transportation constraints on Florida Gas Transmission (FGT).

“We’re dealing with overage alert days and allocations on FGT, and it has not been a good a morning,” said a utility buyer. “They are having problems getting supply into the state and are issuing an overage alert days with only a 2% tolerance. There’s suddenly a lot of demand in Florida and there’s no wiggle room right now,” she said. “Prices moved up late in the session. I almost miss the tornados and snow in Illinois.”

FGT said market area linepack is very low and temperatures are approaching 90 degrees. Gulfstream also has reported a low linepack situation.

Northern Natural Gas has been dealing with a leak on its Matagorda Off-Shore Pipeline System (MOPS) in the Gulf of Mexico all week. The company declared a force majeure on Tuesday when the leak was detected on its 20-inch mainline near MOPS platform 787. A Northern spokesman said, however, that the leak is affecting only about 5 MMcf/d out of the 80-100 MMcf/d that flows on the system. He said the leak is expected to be repaired by next Monday or Tuesday.

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