Storms

Few tropical storms have packed the punch of Isidore. Despite not reaching hurricane strength, the storm, with its wide girth, heavy rain and high seas and winds, wiped out as much as 4.5 million bbl of oil and 25 Bcf of natural gas production in the Gulf of Mexico last week as hordes of producers fled Gulf platforms and rigs, according to the Minerals Management Service (MMS). October futures prices soared to new 15-month highs at $3.99 last Monday before retreating to $3.686 at expiration on Thursday, and Henry Hub cash prices jumped to highs of more than $4 before slipping to $3.59 on Thursday.

Despite higher cash market prices, natural gas futures checked lower Monday as traders learned that neither of the tropical systems being monitored Friday had been able to strengthen over the weekend. The October contract suffered the largest setback, tumbling 10.8 cents to finish at $2.392.

Buoyed by a combination of a bullish tropical storm and storage concerns, natural gas futures rumbled higher Tuesday as weak shorts propelled the market to its highest level in almost two weeks. The September contract finished 9.5 cents stronger at $3.049. The out months were equally impressive, led by the October and November contracts which each gained 9.9 cents to close at $3.142 and $3.404 respectively.

Weekend winter storms in much of the Midcontinent/Midwestcombined with expectations of even worse to come this week over amuch wider area to push cash prices higher by well over a dollar atnearly all points. Only the PG&E citygate was a tad shy ofrealizing a three-digit advance.

Natural gas futures continued to defy gravity Friday when a laterally nullified losses achieved earlier in the session. Afterposting an early low of $4.395, September rumbled higher to closeat $4.475 and in doing so, posted a gain for the ninth straightsession. Estimated volume was extremely light, with only 37,841contracts changing hands.

What a difference a week can make. After watching helplessly asprices plumbed fresh two and a half months lows last Wednesday,bulls at Nymex were back at the helm yesterday and with the help ofa neutral to slightly bullish storage report were successfuldriving prices up 5.7%. The prompt month experienced it secondstraight advance of more than 20-cents, bubbling 22.7 cents higherto finish at $4.214.

If this spring is any indication of what’s to come this summer,utility and power grid operators in the Northeast and Mid-Atlanticregions might want to say a few extra prayers for electricreliability and affordable power.

After failing to completely fill a chart gap left from lastweek’s precipitous decline, the futures market slipped loweryesterday as bears were victorious ahead of weekly storage data.The October contract was hardest hit, suffering a 6.5-cent declineto finish at $2.612 amid average trading volume.

Unocal Corp. said lower oil and gas prices, coupled withincreased exploration costs because of several dry holes, led tolower third quarter earnings of $36 million, or 15 cents per share,compared with $177 million, or 70 cents/share in the third quarterof 1997. Earnings from continuing operations, excluding specialitems, were $4 million, or 2 cents per share, compared with $94million, or 38 cents per share in 3Q97. Total revenues for thethird quarter were $1.4 billion, about the same as a year ago.Capital expenditures were $502 million, up from $308 million in thesame period of 1997.