From the Wall Street Journal
Natural gas prices ticked up Wednesday, reversing course after two days of losses as a storm brewing in the Gulf of Mexico continued to strengthen.
Natural gas for October delivery rose 6 cents, or 2.12%, to $2.887 a million Brutish thermal units on the New York Mercantile Exchange Wednesday.
Tropical Storm Hermine gained strength Wednesday as it headed toward Florida, and the National Hurricane Center said it is poised to be near hurricane strength by the time it makes landfall.
While the storm appears to be moving away from natural gas production and pipelines further west in the Gulf, the government’s Bureau of Safety and Environmental Enforcement said Wednesday that companies have shut in some 10.59% of natural gas production in the gulf waters.
Even so, the Gulf now accounts for a smaller share of natural gas production in the U.S., as onshore production from shale rock has boomed in recent years.
While expectations of higher temperatures are still supporting natural gas prices, Kyle Cooper, a consultant at Ion Energy Group in Houston, said the storm could cut into demand for natural gas.
“It could actually end up being a little bit of a net negative,” said Kyle Cooper, a consultant at Ion Energy Group in Houston.
Traders are also waiting on weekly inventory data. The natural gas market is oversupplied, with inventories standing 11.7% above the five year average for this time of year as of Aug. 19.
Analysts and traders surveyed by The Wall Street Journal expect the Energy Information Administration to report Thursday that stockpiles of natural gas rose by 42 billion cubic feet in the week ended August 26, less than the 67-bcf average build for this time of year.
If the storage estimate is correct, inventories as of Aug. 26 totaled 3.393 trillion cubic feet, 7.3% above levels from a year ago and 10.6% above the five-year average for the same week.
