Prices continued to rise across the board Tuesday, although in nearly all cases the increases were smaller than those of the previous day. Fundamental market influences remained fairly weak for the most part, but the combination of a substantial amount of offshore production remaining shut in and the natural gas screen joining the rest of Nymex’s energy futures products in new run-ups was able to push cash numbers higher again.

The slow pace of restoring Gulf of Mexico production from last week’s Hurricane Ivan outages and anticipation of further strength in energy futures is likely to keep cash prices firm for the rest of the week, traders concurred.

Based on reports from 18 companies, the Minerals Management Service office in New Orleans estimated that 2,790.9 MMcf/d of offshore gas (along with 665,665 bbl/d of oil) remained shut in at midday Tuesday. That represented a restoration of only a little more than 100 MMcf/d from Monday’s figures. MMS said 35 platforms and one mobile drilling rig were still evacuated, and that Tuesday’s shut-in volume was equivalent to 22.69% of the Gulf of Mexico’s approximately 12.3 Bcf/d in gas output. Cumulative shut-ins from Sept. 13 through Tuesday were up to 36.119 Bcf, or about 0.8117% of the Gulf’s yearly production of about 4.45 Tcf, MMS said.

Tennessee and Sonat appeared to still be suffering the biggest hits from supply shortfalls. A news story reported that Tennessee had about 270 MMcf/d remaining offline Tuesday. The pipeline posted these facility outages due to Hurricane Ivan as still in effect Tuesday: Blue Water System East Leg from Ship Shoal 198 to Station 523; Cocodrie Triple T System from Eugene Island 365 to Ship Shoal 198; Bay Marchand Central Gathering Structure; South Pass 77 527A-700 Line; and South Pass 49 527A-1300 Line. Tennessee added in a bulletin board posting that prior to Hurricane Ivan, it had 1,090 MMcf/d scheduled through Main Line Valve 527. Currently 620 MMcf/d is scheduled through MLV 527, it said.

The story quoted an El Paso Corp. spokeswoman as saying 40 Sonat meters were under force majeure, while another 30 points were flowing about 265 MMcf/d. Before the storm outages, the 70 meters had been flowing 800-850 MMcf/d, the spokeswoman said..

According to another news story Tuesday, BP did not expect its Gulf of Mexico operations that had been shut in to be restarted for two or three weeks.

The Atlantic tropical scene continued to be active Tuesday, but any potential threat to the offshore production area was quite remote. Hurricanes Jeanne and Karl and Tropical Storm Lisa were not expected to near any land masses through this weekend, The Weather Channel said. However, what TWC called “a distant cousin” of the recently departed Ivan, a small low-pressure center moving westward through the Gulf, “will be eyed with some degree of apprehension. Slow intensification of this Ivanesque relative is possible, and it may try to validate its heritage by hurling a few showers or squalls toward the northern Gulf Coast.”

And don’t look now, but the Weather 2000 consulting firm says the Gulf may not have seen the last of Ivan. “Believe it or not, the low-level core circulation of Ivan has remained alive, and after drifting off the Mid-Atlantic Coast, has slowly meandered southward down the Gulf Stream toward Florida over the past few days!” Weather 2000 said in an advisory. “We have been monitoring the remnants of Ivan since landfall, and our research concludes that potential reorganization and reintensification in the Gulf of Mexico (perhaps temporarily as a Baroclinic-Tropical Hybrid) is quite possible this week, after it crosses back over Florida! Stay tuned…”

Sources in both the Northeast and Midwest said it seemed odd to see cash prices trading so strongly when neither could discern any significant weather load in their respective market areas. The market is tight right now with production outages, “and I think we’ll keep seeing cash strength through this week,” said a Midwest marketer reporting “gorgeous weather” in her city. But beyond that is much more unsure, she continued. “We’re in a typical shoulder month” and about to enter another one, she noted, and meanwhile, many storage facilities are already close to full with another whole month to go in the traditional injection season.

The Northeast trader reported similar mild weather, adding that cash was able to base almost all of its gains on the offshore production outages, along with some support from the recent futures run-ups. “The market is kind of speculating that there may be more storm-related problems with Gulf of Mexico production than what has been reported publicly,” he said. The fact that shut-in gas is only returning to market very slowly is adding to the current bullish mood, he went on. “Things will settle down after a while, but it looks like we’re still in for a bumpy ride this week.”

The West tended to have most of Tuesday’s upticks of less than 20 cents. That was due at least partially to the declaration of a high-linepack OFO by PG&E (see Transportation Notes). However, on the other side of the coin, Westcoast said low linepack conditions were persisting on its system, although it expected some recovery to begin Tuesday. Meanwhile, Westcoast had its imbalance tolerance range set at 20% pack and zero draft.

Some extra support for western prices came from temperatures going as low as the 40s in elevated sections of Wyoming and Colorado, although population tends to be sparse in those areas.

Lehman Brothers analyst Thomas Driscoll said he expects a storage injection of 70 Bcf to be reported for the week ended Sept. 17. “We estimate the impact of Hurricane Ivan was approximately 20 Bcf for the week and will be about 30 bcf overall, with most of the remainder affecting injections in the week ending 9/24/04,” he added.

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