Continued

Prices continued to deteriorate Tuesday for much the same reasonas in the previous couple of trading days: weather that’s cool butnot sufficiently cold to generate significant heating demand. Therewasn’t even much cooling load left in Texas after astorm-generating cold front that had knocked out phone service indowntown Tulsa for several hours Monday got as far south asHouston.

Cash prices continued to act like rampaging bulls as Octoberbegan Thursday. Double-digit increases of between 10 and 20 centswere the order of the day almost across the board as traders notedchilly weather in major northern market areas and the fact thatGulf of Mexico production, while nearly back to normal afterhurricane outages, still was missing a few hundred MMcf/d. At leasttwo big processing plants in southeast Louisiana remained shut downdue to storm damage. Cash also built on Wednesday’s big screenrun-up and initially higher futures prices Thursday. Even theNovember contract eventually wound up with a small loss, a traderpointed out.

Prices continued to weaken at nearly all points Tuesday in boththe incremental and October bidweek markets. Offshore supplies wereslow in returning from hurricane-related outages, but tradersseemed to discount that factor and to depend on abundant gaselsewhere to take up the slack. They also observed that weather andstorage fundamentals remain weak.

Atlantic Richfield Co. (ARCO) told employees it will lay offworkers and cut its operating budget in anticipation of continuedlow oil prices. No details on the number of job cuts or where theywould be made were available. A company spokesman told NGI ARCOshould have a plan in place by mid to late October. ARCO has about20,000 employees, all but about 3,500 of them in the United States.

Hurricane Georges continued along a path yesterday that revealeda stunning possibility that the Gulf of Mexico could be paid afifth unwelcome visit by a named storm this hurricane season,making 1998 one of the most active in recent memory. And therestill are more than two entire months left for mother nature tobrew up even more trouble. Two more tropical storms are growing inintensity right behind Georges.

Noticing continued futures strength and a growing threat of newstorm shut-ins in the Gulf of Mexico, cash prices built onTuesday’s gains with even bigger ones Wednesday. Increases oneither side of 20 cents were common at nearly all points. TheCalifornia market, far removed from Gulf storm influence, sawsmaller gains of about a dime, although a Malin rise of 13 centsnearly fulfilled one source’s prediction of up 20 cents there (seeDaily GPI, Sept. 16) based on Tuesday’s intra-Alberta pricestrength.

Williams’ Kern River Pipeline has taken action to ensure itscontinued control over market access, completing an agreement tobuy-out a future option on the California portion of the line heldby Southern California Gas. The option would have been exercisablein 2012.

The futures market continued its rally on Friday, fed on asteady diet of short-covering and local buying ahead of the holidayweekend. Early gains posted by the October contract led to a quickspike to the $1.86 level before light position squaring trimmedadvances before the closing bell. That left the prompt contract upa respectable 7.1 cents to settle at $1.783. October was not alone,November and December each more than matched October’s gains,increasing 7.6 cents and 7.3 cents, respectively.

The futures market continued to trade sideways to finish out theweek on Friday despite the large bearish sentiment, underpinned byfundamentals, that continues to dominant the market. The Septembercontract may have slipped only slightly to settle at $1.947, but itwas not for a lack of trying. Friday produced very choppy tradingthat had the prompt month bouncing between the $1.90 and $2.00.