As energy traders monitored the developments of a tropical cyclone that could reach the Gulf Coast by this weekend, natural gas futures were trading several cents higher early Wednesday. The July Nymex contract was up 6.0 cents to $1.837 at around 8:45 a.m. ET.
The National Hurricane Center early Wednesday was monitoring Tropical Storm Cristobal, which was about to make landfall on the coast of Mexico.
“Cristobal is moving toward the southeast near 3 mph, and this general motion is expected to continue this morning, followed by a turn toward the east this afternoon,” the NHC said in an advisory released at 8 a.m. ET. “A motion toward the north-northeast and north is expected on Thursday and Friday.”
The NHC’s probable path for the storm as of early Wednesday showed it heading directly for the Gulf Coast between Houston and Louisiana by late this weekend or early next week.
Bespoke Weather Services said forecasts show Cristobal “likely making a landfall somewhere in Louisiana this weekend as mostly a rainmaker for parts of the South.”
Meanwhile, the latest data early Wednesday suggested some improvement day/day in the supply/demand balance, including a roughly 0.5 Bcf/d increase in liquefied natural gas (LNG) export demand, according to the firm.
“Production is off 0.5 Bcf/d, and power burns look stronger both on an absolute and weather-adjusted basis,” Bespoke said. “All of this is supporting prices so far this morning.”
However, “considerable uncertainty” remains over future trends for LNG exports, and the market will also have to factor in Thursday’s Energy Information Administration (EIA) report, expected to “again shed more light on the balance situation,” the firm said. “There will also be temporary impacts” from Cristobal moving through the Gulf of Mexico this weekend, “likely resulting in some production shut-ins but also halting LNG shipping, along with lowering demand in parts of the South.”
Cristobal’s looming presence points to yet another example of the unprecedented times the world is experiencing, according to analysts at Raymond James & Associates Inc.
“In what feels like a year when every event is a record of some kind, the Atlantic Hurricane season has now had three named storms to June 2…breaking the previous record,” the Raymond James team said. “For context, we didn’t reach three named storms until Aug. 20 during the 2019 season.
“The storm is expected to remain stalled in the Gulf just off the coast of Mexico but is projected to shift toward the Houston-New Orleans portion of the U.S. Gulf, where much of the country’s energy infrastructure is located.”
July crude oil futures were off 15 cents to $36.66/bbl at around 8:45 a.m. ET, while July RBOB gasoline was off fractionally to $1.1085/gal.
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