Hurricane

Natural gas futures on Thursday continued to trade at the elevated price levels last seen post-Hurricane Katrina as traders and market-watchers debated whether fundamentals, the influx of monies into commodities or sympathy with record crude prices, is to blame. April natural gas put in a new high for the move up at $9.815 before settling at $9.742, nearly unchanged from Wednesday’s finish.

Extreme volatility in weather or an active hurricane season could alter their fundamentally bullish outlook, but Raymond James & Associates analysts said last week that tightening supply and demand fundamentals should yield a more bullish summer-ending storage scenario at around 3,100 Bcf, with higher sustainable prices through this year and into 2008.

Extreme volatility in weather or an active hurricane season could alter their fundamentally bullish outlook, but Raymond James & Associates analysts said Monday that tightening supply and demand fundamentals should yield a more bullish summer-ending storage scenario at around 3,100 Bcf, with higher sustainable prices through this year and into 2008.

U.S. natural gas production in 3Q2006 increased 5.5% year over year — an improvement largely reflective of hurricane-related recovery, according to energy analyst John Gerdes. However, Gerdes’ survey also noted 2.2% production growth compared to 2Q2006, suggesting that overall, domestic gas production may rise about 2% this year, or 1 Bcf/d.

With Hurricane Florence spinning harmlessly off the East Coast and moderate temperatures engulfing large regions of the country, October natural gas futures on Monday continued to explore lower price levels. The prompt month put in a low for the day of $5.440 before settling at $5.670, down just half a penny on the day.

Joining the ranks of forecasters who are slashing their 2006 Atlantic hurricane activity predictions, Andover, MA-based WSI Corp. downgraded its outlook Wednesday for the second time in two months. WSI said it now expects the tropical season to have 13 named storms, six hurricanes and three intense hurricanes (Category 3 or greater).

Although it took a hit for uninsured Gulf of Mexico hurricane losses and despite lower domestic natural gas prices, Chevron Corp. reported net income of $4.4 billion, $1.97/diluted share, for the second quarter 2006, compared with $3.7 billion, $1.76/share, in the year-ago period, a nearly 19% increase.

Chiming in on the Atlantic hurricane season, which begins Thursday, Andover, MA-based WSI Corp. agreed with other forecasters that the tropical season should be “another active” one, but that it should pale in comparison to last year’s tally of 27 named storms.

Another hurricane season may just be starting, but natural gas producers haven’t forgotten the last one and have tweaked their risk management strategies accordingly. Producers are paying more to preserve upside, but utilities could get caught out later if they lock in too high.