Some scattered flat to moderately higher points swam against an overall strongly bearish price tide Monday. Gains ran as high as about 20 cents, but they were heavily outweighed by losses ranging from 2-3 cents to more than 60 cents. Most of the declines were in double digits, while much of the market’s modest amount of strength occurred at western points outside the Waha/Permian Basin market.

The cash softening was abetted by Friday’s screen loss of 8.4 cents and likely will be extended Tuesday by a further 23.2-cent dive in October gas futures on Monday. Milder weather forecasts in most areas further indicated weakness in the physical market is likely to continue. The Southeast and desert Southwest are the chief remaining bastions of fairly hot temperatures, and eastern portions of the Southeast are expected to be getting cooled off by rains from Tropical Storm Ophelia by Wednesday.

The erratic path of Ophelia (which over the weekend saw its second downgrade from hurricane status) made it seem more dead-set than ever against entering the Gulf of Mexico Monday, which allowed a “lot of long liquidation” in October futures, said a Houston-based trader. The National Hurricane Center now expects the storm to come ashore sometime Wednesday in lower North Carolina, but in the meantime it will be dumping copious rain on the eastern Carolinas.

A potentially bullish counterweight to current cash price softness may have arrived in new evidence that offshore shut-ins caused by Hurricane Katrina have the potential for being even more long-lasting than those of 2004’s Hurricane Ivan.

Much like in the middle of last week, progress on restoring shut-in Gulf of Mexico gas production came to a near-stall over the weekend. Minerals Management Service (MMS) counted 3.784 Bcf/d as remaining offline at midday Monday — a drop of only 45 MMcf/d from the preceding Friday (see related story). Cumulative deferred production since Aug. 26 grew to 91.811 Bcf, MMS said.

Southern Natural Gas handily beat Florida Gas Transmission Zone 3 for the day’s top quote, although FGT Zone 3 barely edged out Southern again for highest average. Both pipes were hit hard by Katrina-caused outages, with FGT reinstating an Overage Alert Day notice Sunday and Southern reporting it had found damage to pipe supports at levee crossings north of Toca (LA) Compressor Station, where a force majeure remains in effect for upstream points (see Transportation Notes).

Several sources remarked on how typical autumn shoulder-month conditions are starting to establish themselves in the cash market. Things are getting settled down again, said a marketer, with some form of normalcy returning after the Katrina-related disruptions of the past couple of weeks. It’s still warm in the Northeast, so there’s “decent demand” for mid-September but nothing special, he continued. In other words, it’s “fairly typical” for trading in a shoulder month, the marketer concluded.

A Texas trader concurred, noting that activity seemed a bit thinner than usual Monday because of a number of traders attending a utility conference in Chicago this week. However, there was no resultant tightness in liquidity, he said. The trader noted that a cool front was moving eastward across Texas, helping suppress air conditioning load in the Lone Star state. Plunges exceeding 60 cents at Katy and the Houston Ship Channel reflected the lower demand.

“It’s been hot and windy here,” said a Lower Midwest utility buyer. The region shouldn’t be experiencing 90-degree temperatures in the middle of September, he said, but that would last only another day or so and then highs should be in the 70s later this week. “We’ve got a little power load going,” which helps keep up company throughput, he commented.

A marketer in the Upper Midwest was thinking along the same lines. “It’s hot, hot, hot up here in the 90s,” at least through Tuesday, she said, noting that norms are more like the mid 70s in mid-September. However, she also anticipated a cooling trend starting around Wednesday. The marketer said she again eschewed daily market participation, waiting for prices to get still lower. Prices were moving in the desired direction and should continue to do so Tuesday, based on Monday’s screen weakness, she said. But even if they were to drop another couple of dollars, that would still be way above what the market has historically experienced.

Citigroup analyst Kyle Cooper made a final estimation of a storage build of 71-81 Bcf for the week ending Sept. 9, a significant change from his initial guess in the 60s Bcf. “[P]ossibly the Labor Day effect was more significant this year,” Cooper noted.

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