Natural gas prices sank early on Monday on expectations of lower demand due to cooler weather and lower liquefied natural gas (LNG) feed in the aftermath of Hurricane Laura passing through the U.S. Gulf Coast.
As of 10:11 a.m. EDT, the benchmark Henry Hub price was down 5.87 percent on the day to $2.502 per million British thermal units (MMBtu), also due to profit-taking after traders had increased their net buying position in the commodity ahead of Hurricane Laura's landfall last week.
Ahead of Hurricane Laura's landfall, oil producers in the Gulf had shut in more than 84 percent of oil production and more than half of gas production, and the market was bracing for disruptions.
Ahead of the Hurricane Laura's landfall, hedge funds and other money managers had increased their net long position - the difference between bullish and bearish bets - on natural gas by 4 percent to 308,323 lots in the week to August 25, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday, commenting on the Commitments of Traders (COT) report for the week ending August 25. The net long bets on natural gas hit a nearly two-year-high, Hansen said.
After Hurricane Laura, demand for natural gas to LNG export facilities has not recovered yet, and is still nearly half of what it was before the hurricane, according to estimates from Genscape reported by Natural Gas Intelligence.
Another bearish factor for natural gas prices is the weather forecast for cooler temperatures in some parts of the United States this week, with natural gas demand expected to be moderate, as weather systems with showers are expected to sweep across the northern and central U.S.
Earlier in August, natural gas prices spiked amid heatwaves across the United States.
Natural gas prices had plunged to a 25-year low in June, as demand for gas plummeted on the milder temperatures, and the world remained awash with the fuel.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More