US natgas rises to 9-month high as output collapses ahead of Hurricane Laura

US natural gas futures were on track to hit a fresh nine-month high on Wednesday as output dropped to its lowest since 2018 as producers shut offshore wells ahead of Hurricane Laura.

That higher price move came despite a drop in liquefied natural gas (LNG) exports to an 18-month low as vessels steered clear of the storm.

Hurricane Laura is expected to strengthen into a major Category 4 storm with sustained winds of 130 miles per hour (109 kph) before slamming into the Gulf Coast near the Texas-Louisiana border tonight.

On its second to last day as the front-month, gas futures for September delivery rose 3.4 cents, or 1.4%, to $2.523 per million British thermal units (mmBtu) at 8:32 a.m. EDT (1232 GMT), putting the contract on track for its highest close since Nov. 25.

The October contract, which will soon be the front-month, was up 1.2% to $2.63 per mmBtu.

Although US, European and Asian gas contracts mostly trade on their own fundamentals, a 76% jump in prices at the Netherlands Title Transfer Facility (TTF) in Europe and a 57% increase at the Japan-Korea Marker (JKM) in Asia so far in August have made US LNG more attractive in global markets, which helped push US gas futures up about 41% this month.

On a daily basis, US LNG exports were on track to fall to 2.8 billion cubic feet per day (bcfd), their lowest since February 2019, as exporters shut or reduced output at their Gulf Coast terminals ahead of Laura. The amount of gas flowing to Cheniere Energy Inc's Sabine Pass plant in Louisiana fell to zero for the first time since it started operating in 2016.

US output, meanwhile, was on track to drop to 84.2 bcfd, its lowest since September 2018, according to preliminary data from Refinitiv.