NEW YORK: US natural gas futures rose more than 5% on Wednesday on forecasts for hotter weather, while traders assessed the impact from Hurricane Idalia, which could lead to lower demand for the fuel.
On their first day as the front-month, US gas futures for October delivery on the New York Mercantile Exchange rose 24 cents, or 9.4%, to settle at $2.796 per million British thermal units (mmBtu).
“One uncertainty is the impact of possible storms on Gulf production as we enter the height of the storm season. But normally the impact would be short-lived if no major damage is done,” said Zhen? Zhu, managing consultant at C.H. Guernsey and Co in Oklahoma City.
However, “the market has retreated some lately despite of the abnormal heat blanketed most of the South and the Central regions. I think the prolific production is behind the market feeling less worried about the shrinking storage surplus.”
Hurricane Idalia made landfall in Florida as an “extremely dangerous” Category 3 storm on Wednesday morning after millions of residents evacuated or hunkered down in homes and shelters in anticipation of a life-threatening storm surge.
Traders said Idalia would likely knock out power to over a million homes and businesses, which would cut demand for both power and gas later this week. Florida consumed about 4.4 billion cubic feet per day (bcfd) of gas in 2022, with most of that fuel, about 3.8 bcfd, burned to produce power.
So far, more than 200,000 homes and businesses were without power in Florida, according to data from PowerOutage.us.
Despite worries about a possible strike at US energy major Chevron’s liquefied natural gas (LNG) export plants in Australia, gas prices in Europe were trading around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark on Wednesday, after soaring 20% over the prior two days.
Australia, along with Qatar and the US, is one of the world’s biggest LNG producers. If Australia’s LNG supplies decline, analysts expect global gas prices will rise.
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