Impetus

The prospect of finding deep gas in the shallow waters of the Outer Continental Shelf (OCS) appeared to be the impetus for bidding in Western Gulf of Mexico (GOM) Lease Sale 187 on Aug. 20. Shallow water leases, in plays less than 200 meters deep and more than 15,000 true vertical depth, piqued most producers’ interests, with the offshore sale netting $258.7 million in total bids for chances to explore 3,996 blocks.

The prospect of finding deep gas in the shallow waters of the Outer Continental Shelf (OCS) appeared to be the impetus for bidding in Wednesday’s Western Gulf of Mexico (GOM) Lease Sale 187 on Wednesday. Shallow water leases, in plays less than 200 meters deep and more than 15,000 true vertical depth, piqued most producers’ interests, with the offshore sale netting $258.7 million in total bids for chances to explore 3,996 blocks.

With little in the way of fresh fundamental or technical impetus, natural gas futures drifted sideways and lower Tuesday as traders elected to wait for a clearer supply-demand picture to develop. The September contract remained within an extremely tight 5.5-cent range, well beneath Monday’s gap lower open, but safely above support in the $3.03-10 area. At the closing bell, September was 1.7 cents weaker at $3.17.

Without any impetus to break in either direction, natural gasfutures continued to subsist on a steady diet of range-boundtrading yesterday at the New York Mercantile Exchange. But incontrast to Tuesday’s session, which featured the market closingnear its high trade for the day, Wednesday’s session was dominatedby selling that ushered the prompt August contract down 3 cents to$2.146. Estimated volume was light, with only 44,985 contractschanging hands.

Fundamental weather demand didn’t change much, so it must havebeen the impetus from a rising Henry Hub futures contract thatallowed cash prices to post widespread small gains Tuesday, sourcessaid. Few of the increases were much more than 1-3 cents except forSumas, where prices rose as a force majeure remained in effect atWestcoast’s McMahon Processing Plant (see Transportation Notes).

Lacking any impetus from fundamentals or a sedate futuresscreen, the vast majority of points settled down for a level ridein a quiet market Wednesday. The few increases of any size occurredin the Rockies and California and were attributed to supplyconstraints and continuing heavy air conditioning load.