Assault

January natural gas futures resumed their assault on $7 price support in Monday trade, recording a low of $7.010 before closing out the day at $7.032, down 12.3 cents from Friday’s finish. While traders were debating storage levels and weather forecasts, they were also forced to account for the possibility of an out of season tropical storm, which was gaining strength east of Puerto Rico.

After taking a break to explore the upside on Thursday, January natural gas futures on Friday resumed their assault on psychological support down at $7. The prompt-month contract reached a low of $7.120 before closing out the week at $7.155, down 17.5 cents from Thursday’s finish and 24.7 cents lower than the previous week’s close.

Despite beginning Tuesday’s regular trading session with another assault on the contract’s $9.91 high, September natural gas futures would get no closer than the $9.89 it posted at the market’s open.

Falcon Gas Storage reported that its MoBay Storage Hub facilities withstood a full frontal assault from Hurricane Ivan last week but sustained only minor damage. Located in state waters just offshore in the Mobile Bay area of Alabama, the high-deliverability gas storage project is slated for development into 45 Bcf of working gas capacity with a maximum withdrawal rate exceeding 1 Bcf/d. Falcon currently is delivering gas production from MoBay to markets in the Southeast and Florida pending receipt of state and federal permits for conversion into gas storage. Construction to convert Falcon’s MoBay project into a gas storage facility is scheduled to start late in the third quarter of 2005. “We took a direct hit from the worst storm to hit the Mobile Bay area in 50 years and still sustained only minor damage,” said CEO John M. Hopper. “Our operations people estimate that waves of up to 48 feet and wind gusts in the 140-150 mph range pounded our production facilities throughout the night and early morning as the hurricane made landfall, but we didn’t even lose the roof on our main platform… Despite all that Ivan threw at us, we were up and running at full production capacity within 72 hours after the storm made landfall. We’d have been making gas deliveries sooner if the take-away pipelines in the area had been fully operational over the weekend.” The storage hub will connect with all four pipelines that serve the southeast and Florida market areas: Gulfstream, Florida Gas, Transco and GulfSouth. Interconnections also are planned with all the gas processing and gathering facilities in the Mobile Bay area.

Despite closing almost 2 cents up on the day, some market-watchers considered Tuesday a loss for August natural gas futures as morning trading levels as high as $5.96 could not be sustained. The prompt month tapped out at $5.805 on the downside in afternoon trading before settling at $5.837, up 1.9 cents on the day.

As parts of the Northeast and Midwest “enjoyed” a brief respite from an ongoing siege of severely cold weather, prices took steep dives Monday. But with an even worse blast of winter set to show up as early as Tuesday night, traders braced for what are expected to be fairly large rebounds.

Just as it looked like prices were going to make another assault on the $3.00 level, natural gas futures rebounded yesterday morning in a knee-jerk reaction to reports that a tropical storm had formed in the Gulf of Mexico. While market watchers and traders have been mindful all week about a serious low pressure system bringing rains to Florida, few expected it to develop into a tropical system so quickly. The September contract led the price march higher, finishing 11.1 cents stronger at 3.192. The 12-month strip, meanwhile, lagged somewhat, closing 7.8 cents higher at $3.533. Estimated volume was light with just 52,503 contracts changing hands. As of 5 p.m. EDT Thursday Barry was about 315 miles southeast of the mouth of the Mississippi River, according to the National Weather Service. It was moving toward the northwest at 4 mph and likely to make a gradual turn to a west-northwest track Friday, NWS said, forecasting “some strengthening” of Barry, which was packing a maximum sustained wind of 45 MPH yesterday evening. A tropical storm is labeled a hurricane when sustained winds have reached 74 MPH.

“It’s not as if this is the Grand Canyon,” said a former energy spokesman for the Bush campaign in response to an assault on the president’s proposal to open up the pristine Arctic National Wildlife Refuge (ANWR) to oil and natural gas exploration and development.

“It’s not as if this is the Grand Canyon,” said a former energy spokesman for the Bush campaign in response to an assault on the president’s proposal to open up the pristine Arctic National Wildlife Refuge (ANWR) to oil and natural gas exploration and development.