Spot prices for natural gas were up 10-20 cents Tuesday in response to higher Nymex futures prices and a little bit of heating demand in Northern market areas. Warmer temperatures in the desert Southwest and maintenance on El Paso contributed to price increases in that region, while a rupture on TransCanada’s Peace River mainline in remote northwestern Alberta forced the shut-in of about 200 MMcf/d.

Meanwhile, the Minerals Management Service reported that some production remains shut-in due to Hurricane Lili, but the shut-in volumes fell to 1.7 Bcf/d on Tuesday from 2.6 Bcf/d on Monday and 9.9 Bcf/d last Friday. The MMS said 86 platforms and 1 rig remain evacuated and about 237,275 b/d of oil remain curtailed.

“We’re in good shape on supply despite the shut-ins, but it does look like the shut in volumes are taking longer than expected in returning to normal,” said one New England utility buyer. “The weather is finally starting to become normal,” he noted. “Over the weekend we had a high of 80 degrees compared to a normal high of 66. The first seven days of the month temperatures were above normal by nine or 10 degree days, but currently it looks like the next two weeks are going to be normal to cooler than normal. In the next few days it will get low enough at night to kick on a little bit of heating load.”

In contrast to the Northeast, hot weather was kicking back in a little in the Southwest adding a little cooling/generation demand down there. “I doubt it will hold the market up if the trend turns on us,” said one southwestern utility buyer. “But the temperatures are about 10 degrees above normal in the mid 90s in Arizona. We’re not burning a whole lot, maybe a little more than normal.”

Perhaps a greater contribution to the higher western prices was the cumulative effect of maintenance on El Paso’s North Line, South Line and San Juan Crossover, he said. “It’s cutting about 300 MMcf/d in total.” He reported San Juan non-Bondad in the mid to high $2.70s.

Waha prices rose 15 cents into the low to mid $3.60s. Keystone was in the high-$3.50s. California border quotes were averaging in the low to mid $3.40s, up 15 cents.

“I think over the next few days here, we’ll be following Nymex,” said a marketer. “If it heads back to $4, we’ll see prices going up. If it drops below $3.67, we should see cash prices fall.”

Prices jumped a quarter to the low $1.60s at Opal, WY. Production behind the point has been slow in returning due to delayed work on the Jonah Gas Gathering system. “We will be at 850 MMcf/d by Thursday or Friday at the latest,” said Jonah spokeswoman Sherry Andersen said, noting the company was unable to bring the full 850 MMcf/d up on Tuesday as previously predicted. “We didn’t ramp up as fast as we thought.” She noted that the expansion will add 125 MMcf/d to the Jonah gathering system.

TransCanada reported a pipeline rupture on its Peace River mainline in remote northwestern Alberta. There were no injuries. The line ruptured Tuesday morning and took about 200 MMcf/d of production off the market, pushing AECO prices up to $4.70. Prices in British Columbia and the Pacific Northwest also rose. Station 2 in British Columbia was up more than 20 cents. Kingsgate and Stanfield prices also fed off the strength. PG&E Citygate jumped to $3.50-55, but one source noted the point was weak relative to December quotes, which were trading at screen minus 5-9 cents (equivalent to $3.78-80). “It makes sense to either stuff gas in the ground or pack the pipe to gain a positive imbalance going into December.” PG&E reported system inventories approaching the red zone of 4.5 Bcf, but an operational flow order is not projected over the next few days.

With temperatures expected to warm up from the 60s to the 70s in Chicago by the weekend, the market was relatively thin in the Midwest, a trader said. End-users also are beginning to feel the crunch of the economy and their appetite for natural gas is beginning to wane, she added. “If it weren’t for the strength in the futures market, Chicago would be trading below index,” she said. “As long as swing prices remain above index, you will not see much in the way of demand for storage injections.”

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