With Hurricane Florence making landfall in the Carolinas and the market left to wait to assess the storm’s full impact, October natural gas futures were trading slightly lower shortly after 8 a.m. ET Friday, down about 0.8 cents to $2.809/MMBtu.
Florence made landfall Friday near Wrightsville Beach, NC, with the center located about 10 miles south of Wilmington, NC, the National Hurricane Center (NHC) said in its 8 a.m. ET advisory. The storm, traveling at about 6 mph, was rated at a Category 1, with maximum sustained winds of 90 mph.
“A slow westward to west-southwestward motion is expected today through Saturday,” NHC said. “On the forecast track, the center of Florence will move further inland across extreme southeastern North Carolina and extreme eastern South Carolina today and Saturday. Florence will then move generally northward across the western Carolinas and the central Appalachian Mountains early next week.”
Some parts of the Carolinas in the storm’s path could see another 20-25 inches of rainfall, with up to 30-40 inches in places, according to NHC.
As of 8 a.m. ET, Duke Energy’s real-time outage data showed around 280,000 customers without power, mostly in North Carolina. The Charlotte, NC-based utility has projected anywhere from one to three million outages across the Carolinas resulting from the storm and has said restoration could take weeks, not days.
“It will not be possible to fully assess the impact of the storm for several days,” EBW Analytics Group CEO Andy Weissman said Friday. “In the interim, Florence is likely to remain the gas market’s main focus, with traders reacting to conflicting reports over the course of the day.
“Yesterday’s trading suggests that the market is starting to take a more bearish view than it did earlier in the week. The October contract spent several hours testing resistance again just below $2.86. After resistance held, futures sold off sharply, reversing earlier gains,” he said. “Florence’s downgrade to a Category 1 hurricane suggests that damage to the transmission grid may not be as devastating as anticipated earlier in the week. We still expect, though, that after the dust settles, gas prices will continue to head lower.”
NatGasWeather said it expects Florence to “play out primarily bearish” for demand by bringing rain, power outages and cooler temperatures, potentially offset by nuclear outages that would require more gas-fired generation in the power stack.
“There’s also a weak tropical system in the western Gulf of Mexico that will bring heavy rains to portions of Texas, but again with bearish impacts unless it were to stall over producing regions with heavy rains to produce flooding, which is likely to only be locally,” the firm said. “For the rest of the country, the overnight data was mixed with a few datasets a touch warmer and a few a touch cooler, but overall maintaining a very warm U.S. pattern this weekend and next week besides the cooler Northwest.”
While the weather models could see variability over the weekend as they try to account for tropical systems over the Gulf of Mexico and Atlantic, they “should advertise a comfortable to a touch warmer-than-normal pattern for most of the U.S. apart from the far North, at least through Sept. 28-29 when stronger cool shots are likely,” according to NatGasWeather.
October crude oil futures were trading about 29 cents higher Friday morning at around $68.88/bbl, while October RBOB gasoline was down fractionally to around $1.9860/gal.