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U.S. natural gas futures fell sharply on Monday as Tropical Storm Francine in the Gulf of Mexico was expected to make landfall on the upper Texas and Louisiana coasts on Wednesday, raising the possibility of lower natural gas prices by reducing demand. By cutting off power and putting LNG export terminals out of service.
“Impacts are expected to be more bearish than bullish due to power outages, demand destruction from cold temperatures, and the potential disruption of LNG exports in and out of the Gulf of Mexico,” NatGasWeather.com said.
While gas production losses in the Gulf of Mexico are possible, “the most likely scenario involves a short-term disruption to gas demand, but No permanent damage to infrastructure.Barring a hurricane threat, “extended supply cuts, technical momentum and a historically cheap October contract create conditions for a late-month push higher,” EBW Analytics said, according to Dow Jones.
Gulf Coast hurricanes often caused gas prices to spike two decades ago or more, when 20% of U.S. gas came from the Gulf, but now the offshore region produces just 2% of total U.S. natural gas production, compared with about 15% of total domestic crude oil production.
Natural gas futures in New York (NG1:COM) for the first month of October settled -4.6% At $2.170/MMBtu, but October Nymex crude (CL1:COM) closed at $2.170/MMBtu. +1.5% To $68.71 per barrel, and Brent crude (CO1:COM) ended the first month of November trading at $68.71 per barrel. +1.1% To $71.84 per barrel.
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While the storm threat has weakened natural gas prices, crude oil futures have risen from 15-month lows on the possibility of Hurricane Francine. Disable power operations In the Gulf of Mexico area later this week.
“Atlantic storms have a high potential to cause at least some problems for oil transportation and offshore production,” Phil Flynn of Price Futures Group said, according to Dow Jones, adding that a potential storm landing along the upper Texas and Louisiana coast “is at the heart of U.S. oil and gas production, transportation and refining.”
Producers including Exxon Mobil (XOM), Chevron (CVX), Occidental Petroleum (OXY) and Shell (SHEL) have announced their plans. Evacuate staff and limit drilling Preparing for the storm.