Natural Gas: Stubborn Heat Vs. Power-Killing Storms; Which Will Win?
Mother Nature is playing a double game with the natural gas market. The question is, which one will win?
On one end, the summer heat isn’t giving up, not even in late August amid the approach of the Sept 4 Labor Day holiday that unofficially ushers in the fall season. That could keep air-conditioning demand and — most importantly — power burns up over the next four to six weeks.
On the other side, the Atlantic hurricane season is already here, with the potential for more storms to emerge in the warm waters of the Gulf of Mexico. Those could severely cancel out higher temperatures across the Lower 48 States that depend on gas as the primary energy feedstock for cooling.
Also, hurricanes can cause widespread power outages as devastating winds and floods strike at the heart of power grids and gas pipelines.
Eli Rubin of EBW Analytics succinctly captured the duopolistic nature of the market drivers for gas in the near term when he noted that traders would have to beware of the risks/rewards of both, with perhaps a little more bias towards the storms.
In comments carried by naturalgasintel.com, he adds:
“While the near-term tropical forecast appears relatively benign with the majority of storms spinning out to sea, it only takes one major landfalling hurricane to reset the natural gas market trajectory.”
“Risks will remain elevated over the next 30-45 days before retreating modestly into October.”
Charts by SKCharting.com, with data powered by Investing.com
Gas futures on the New York Mercantile Exchange’s Henry Hub remained below the key $2.50 mark, heading for a mid-week decline of about 3% that extended last week’s 8% slump, as the threat of another tropical disturbance kept traders on guard despite the ongoing heatwave
Read more on investing.com
