Modest

Talisman Energy Inc. said Wednesday it will decrease its Marcellus Shale exploration activities and cut its capital spending budget for the play in half this year.

The “perma-bulls” at Raymond James & Associates Inc. have dialed back their assumptions for the U.S. natural gas rig count and giving in to the inevitable: low prices are taking down rigs in the gas patch. The good news: there’s “blistering” growth for oil and liquids drillers.

After a pause to settle landowner disputes along the right-of-way, action is resuming on a pipeline project that will turn the tables on Canadian natural gas exporters by importing U.S. production into Ontario and Quebec.

While the Obama administration last Tuesday proposed only a “modest expansion” of nation’s offshore drilling program for the next five years (see Daily GPI, Nov. 9), the United States’ neighbors — Cuba, Mexico, the Bahamas, Canada and Russia — are aggressively moving ahead on offshore development adjacent to U.S. borders, warned Sen. Lisa Murkowski Monday.

Somewhat improbably, the cash market built upon Friday’s modest gains, which came amidst mixed price moves, with a fairly strong advance across the board Monday. The return of industrial load from its weekend dip was a minor bullish factor, but otherwise reasons for Monday’s upticks were difficult to discern.

October futures managed a modest gain Monday as traders grapple with a sense of seasonality but are forced to recognize the ongoing trend lower. At the close October had risen 2.0 cents to $3.829 and November was higher by 1.0 cents to $3.932. October crude oil plunged $2.26 to $85.70/bbl as Euro-worried equity markets fell.

Virtually all of the cash market was down Friday as modest rebounds of high temperatures and a prior-day 4-cent decline by October futures proved unable to support continued firmness. The usual weekend drop of industrial load applied further downward pressure on cash numbers.

Reality suggests that even with a “modest” decline in the U.S. natural gas rig count in 2012, structural drivers should “more than offset” the drop and gas supply growth even may accelerate over the coming year, the energy team with Raymond James & Associates Inc. said last week.

Not surprisingly, the modest rally of the previous two days came to an end Thursday as generally moderate weather, prior-day futures weakness and a demand-killing hurricane ganged up to cause spot prices to decline across the board.