Storm fears again drive NYMEX gas to higher close

Monday August 23, 5:37 pm Eastern Time

NEW YORK, Aug 23 (Reuters) - NYMEX Hub natgas futures ended up sharply Monday in active trade, lifted again by concerns about storms in the Atlantic despite news Bret weakened after cutting only minimal amounts of Gulf of Mexico gas production.

September rallied 12.6 cents to close at $3.064 per million British thermal units after hitting a new contract high of $3.08 late in the session. October, which also set a new benchmark high of $3.105, settled 11.6 cents higher at $3.08. Most other months also set new highs and ended up 1.5 to 12.0 cents.

``We should have pulled back when Bret went ashore. We did lose some production, but people are also worried about other storms. No one wants to sell into this kind of market,'' said one Midwest trader, adding rain in Texas should cool off the recent record pace of power demand in the state.

At 1100 EDT/1500 GMT, Bret, which was downgraded to a tropical storm earlier today, was located 45 miles south-southwest of Alice, Texas, moving west-northwest at six mph with maximum sustained winds down to 45 mph. Further weakening was predicted as Bret moved inland.

At 1100 EDT/1500 GMT, Cindy, which had hit hurricane status late Saturday, was still a tropical storm located 1700 miles east of the Lesser Antilles, moving west-northwest at 10 mph with maximum sustained winds of 60 mph. Little change in strength was forecast in the next 24 hours.

Also, a well-organized tropical wave was swirling northeast of Puerto Rico, which could pose a threat to the Caribbean later this week.

The MMS said 531 million cubic feet per day (mmcfd) of natural gas was shut in over the weekend by U.S. Gulf producers due to Bret. MMS estimates total U.S. Gulf gas production at 13.8 billion cubic feet per day.

The following pipelines on Monday reported supply cuts on their systems:

    Columbia Gulf - 161 mmcfd
    KN's NGPL     - 150 mmcfd
    Enron's HPL   - 100 mmcfd
    Enron's FGT   - 170 mmcfd
    Total         - 581 mmcfd

But most said they expected the bulk of the shut in gas to be restored later today or Tuesday.

WSC expects the Northeast and Mid-Atlantic to start the week at one to four degrees above normal, then warm to three to eight above normal later. The Southeast and Florida will average normal to four above for the next five days.

Midwest readings will average near seasonal Monday, then climb to as much as 10 degrees above seasonal later in the week. Texas will see mostly above normal temperatures this week, while the West also will be above seasonal.

The NWS six- to 10-day forecast released Monday calls for normal to below normal temperatures for the eastern half of the nation, the California coast and the Pacific Northwest. Above seasonal readings are expected for the rest of the U.S.

Chart traders pegged resistance in September first at the new contract high of $3.08 and then in the high-$3.20s.

Minor support was seen at $2.90, with better support expected at $2.785, a recent contract high, and then at $2.66, the low-$2.60s, the $2.48-2.49 area and $2.425.

NYMEX September natgas expires Friday, August 27.

In the cash Monday, Henry Hub swing quotes on average slipped two cents to the mid-$2.90s though deals were reported as high as $3.01. Midwest pipes firmed several cents to the mid-$2.80s. In the West, El Paso Permian was two cents lower in the mid-$2.70s.

Gas on Transco at the New York city gate was down a few cents to the mid-to-high teens, while Chicago edged up a penny or two to $3.01-3.02.

The NYMEX 12-month Henry Hub strip jumped 8.5 cents to a record $2.888. NYMEX said an estimated 101,460 Hub contracts traded today, up from Friday's revised tally of 100,643.

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