Natural gas prices plunged on Monday by more than ten percent as the outlook for demand and LNG exports worsened as multiple Hurricanes caused disruptions in the U.S. Gulf of Mexico.
By 11:00 a.m. EDT, natural gas prices had fallen by 11.47% to $1.813 MMBtu.
Front-month natural gas futures (NG1) were at $1.829 MMBtu at 10:53 a.m. EDT.
Hurricane season in the Gulf has caused numerous disruptions to both natural gas demand and LNG exports, with Tropical Storm Beta the latest threat to the industry, with ships that would carry LNG avoiding the troublesome area for now, and likely the remainder of the week as Beta—like Sally—appears to be a slow-moving storm that will take most of the week to dissipate.
It is noteworthy that the November contract for natural gas is now trading at $2.684 MMBtu—a staggering $0.855 premium over the front-month contract.
The fall in front-month contract natural gas prices is—so far—the most significant one-day drop over the last 21 months.
Working natural gas in storage in the United States has increased from 3,079 Bcf, according to the Energy Information Administration (EIA) to 3,614 Bcf for the week ending September 11. The five-year average for this time of year is just 3,193 Bcf.
While swelling natural gas stockpiles are a critical concern for the industry, demand for natural gas is even more critical. With the hurricanes ravaging the Gulf of Mexico, the short-term natural gas demand outlook has worsened even beyond the unfavorable outlook given the industry by analysts due to the industrial activity dropoff due to the coronavirus pandemic.
By Julianne Geiger for Oilprice.com
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The cool down in the USA the past few days has been truly epic as well obviously.