Hype

“Storm hype” just doesn’t seem to have the old price punch it used to. For the second week in a row the industry is seeing prices get substantially softer even as a hurricane heads into the Gulf of Mexico (GOM) production area. To be sure, the fact that the projected track of Hurricane Ike had been shifted more to the south — and thus farther from offshore infrastructure — was a major factor in prices dropping across the board Tuesday.

There obviously was little, if any, “storm hype” in either the cash or futures markets Monday. Prices were softer at a slight majority of cash trading points as cooling load was expected to decline in some areas Tuesday while staying subpar for mid-August in others, while prompt-month futures fell 20.4 cents.

Call it “storm hype” if you will, but there was no doubt that the ominously growing threat to Gulf of Mexico production from then-Tropical Depression Five (upgraded to Tropical Storm Ernesto Friday afternoon, well after cash trading had finished) was a major reason why prices increased at a sizeable majority of points Friday.

High oil prices, political hype, lack of adequate market information on either the supply or demand side and “bullish” media influence are among the key factors that have been propping up the price of natural gas, which is headed for a fall, according to a newly-issued report by two leading energy analysts.

High oil prices, political hype, lack of adequate market information on either the supply or demand side and “bullish” media influence are among the key factors that have been propping up the price of natural gas, which is headed for a sharp fall, according to a newly-issued report by two leading energy analysts.

It didn’t take long for “storm hype” to get blown away as a price booster. Even with Minerals Management Service (MMS) reporting that more than 2 Bcf/d of Gulf of Mexico production was shut in Wednesday due to the proximity of Tropical Storm Bonnie, all points fell between a dime and about a quarter in cash trading.

Despite mild-temperature forecasts, the natural gas futures market rebounded Monday as traders bid prices higher on concerns over increased tropical activity in the Atlantic Ocean and Gulf of Mexico. At $5.70 the September contract gapped higher at the opening bell on its way to an early high at $5.75. The contract eased slightly in the late morning hours and then stabilized in quiet afternoon trading. September closed at $5.693, up 10.5 cents for the session.

Back from the three-day weekend, bulls took up where they left off last week as they managed to propel natural gas futures prices higher Monday for the second-straight session. But in contrast to last Thursday’s technical short-covering advances, Monday’s uptick was more basic in nature as buyers bid up the market on the first signs tropical storm activity.

After being “goosed higher” by the rapid development of Tropical Storm Fay in the Gulf of Mexico Friday morning, natural gas futures were hit with a wave of profit-taking late in the session as traders came to the realization that the storm would produce little more than soaking rains. By virtue of its 7.7-cent loss Friday, October’s $3.265 close was not only below the prior Friday’s settle, but also in the lower half of its $3.100-445 trading range for the week. At 103,385, estimated volume was heavy for the session.