Tuesday might have looked bearish from the previous day’s vantage point, but other than some moderate softening that clustered primarily in the West, all other points ranged from flat a little more than a dime higher in a near-repeat of Monday trading. A majority of Tuesday’s gains were around a nickel or smaller.

With Hurricane Isabel now totally written off as a production-area event, opinions were mixed about its potential gas price impact in the market area. A source had pointed out Monday the bearish aspect of the hurricane’s rains lowering temperatures and winds knocking out electrical systems, both of which would tend to lower gas demand. But a Northeast marketer noted Tuesday that quite a few nuclear plants were scheduled to go down for maintenance in the near future, and that schedule very well might be accelerated in East Coast states by Isabel. Gas-fired units probably would be called upon to compensate for much of the lost nuclear generation, he said.

It’s not as if a hurricane would damage a nuke’s reactor containment buildings, he continued, but the potential wind and/or flooding damage to switchyards connecting the plant with the power grid and to other plant facilities are the concerns likely to prompt the plant closings.

The marketer also said operations have been suspended at the Cove Point LNG terminal in Maryland as the storm approaches, and the Distrigas LNG facility likely will follow suit by the end of week. He estimated Cove Point’s peaking supply sendout capacity at 2-2.5 Bcf/d and that of Distrigas at 3 Bcf/d, at least some of which would be replaced by supplies from the Gulf Coast and Canada.

Isabel, which had been designated as a Category 5 (the most powerful) storm earlier, was at Category 2 status Tuesday afternoon but still packed maximum sustained winds of nearly 105 mph with some strengthening possible before its projected Thursday landfall, the National Hurricane Center said. At 5 p.m. EDT Tuesday Isabel’s center was about 570 miles south-southeast of Cape Hatteras, NC.

A hurricane watch was in effect from Little River Inlet, SC to Chincoteague, VA, with tropical storm watches posted both north and south of that coastal segment. “Hurricane warnings will likely be required tonight [Tuesday] for a portion of the watch area,” NHC said.

Outside the hurricane-apprehensive East Coast, weather trends are mixed. Away from the coast, temperatures in the South will be ranging as high as the 90s in parts of Texas Wednesday, The Weather Channel said. The Midwest should be fairly warm, but a Pacific cold front will be approaching from the west. “Much of the West, from the north Pacific Coast to the northern Rockies (including the Great Basin), will suffer an unseasonably chilly day [Wednesday] with temperatures as much as 20 or 22 degrees below seasonal means in the northern Rockies,” TWC said, but added that desert Southwest readings will still reach triple digits at some points.

A Midwest source said the ability of prices to continue holding up Tuesday surprised her, but referred to an old saying among gas traders that goes something like this: “As soon as you think something [such as anticipated softness] about the market, something else happens.” Somebody seemed short at Chicago Tuesday, and their substantial buying helped push up citygates and also field points a little, she said. The source added that her company’s weather consultants were starting to project some regional heating degree days coming up soon, but the number was too small (“not more than a couple or so”) to have any significant market impact.

The Northeast marketer mentioned above concurred that market-area pricing was “surprisingly strong for two days in a row.” Gas prices are much higher than they should be at this time of year with no active storm threat to production, he said. He thought the gas firmness likely was related to power prices in the Northeast that “were strong at $50 [per MWh] and above.” He also speculated that “maybe people who had been taking out of storage to sell might be holding back now,” waiting to see if any hurricane-caused events such as potential pipeline force majeures might make the gas more valuable later.

Western markets felt some negative pressure from a high-linepack OFO by PG&E that carried zero tolerance for positive imbalances (see Transportation Notes). However, PG&E’s LDC neighbor to the south, SoCalGas, did not declare an Overnominations Day.

Lehman Brothers analyst Thomas Driscoll forecast an injection of 100 Bcf in the storage report to be released Thursday by the Energy Information Administration. If realized, a 100 Bcf refill would leave storage inventory levels at 2,586 Bcf, 338 Bcf lower than last year and 109 Bcf below the five-year average, Driscoll said.

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