Analyst estimates storm could cut nearly 10 Bcf of gas output
U.S. natural gas futures climbed in early trade as traders weighed the threat Tropical Storm Isaias poses to Gulf of Mexico production. Nymex natural gas traded 2.3% higher at $3.187 per million British thermal units by 0928 ET, according to The Wall Street Journal.
Isaias formed in the Gulf of Mexico and is forecast to reach the U.S. Gulf coast as a hurricane later this week, the Journal reported. Cunningham, of Tradition Energy, estimated in a research note that the storm could affect nearly 10 billion cubic feet of gas output by the end of the week.
“That potential cut, uncertain as it may be, is giving the bulls a chance to come out of the shadows and push November comfortably above the $3 mark,” Cunningham said.
The November contract’s move above $3 marks a shift for a market where bullish positions had been subdued ahead of the storm.
Cunningham noted that production losses could be offset on the demand side by cooling wind and rain and possible shut-ins of LNG production during the storm.
The article was reported by Anthony Harrup of The Wall Street Journal.