Weekly natural gas cash prices climbed higher as summer heat lingered across much of the Lower 48, offsetting bouts of regionally cooler air and heavy rains ushered in by Hurricane Ida.
NGI’s Weekly Spot Gas National Avg. for the Aug. 31-Sept. 3 period jumped 26.0 cents to $4.365, led higher by gains across the Midwest and Texas.
Ida crashed into Louisiana Aug. 29, delivering widespread wind damage and flooding rains that knocked out power for hundreds of thousands of customers. It also pushed offline natural gas production in the Gulf of Mexico (GOM), though the idled output was offset in part by cooler air early in the week.
Ida weakened as it moved up the East Coast, but it still packed a powerful punch, drenching major markets with record rains. New York City and Philadelphia both endured traffic-paralyzing floods.
This impacted prices along the East Coast at points during the week – weekly prices were down at several Northeast hubs — but heat elsewhere supported weekly prices overall. Persistent summer conditions bolstered prices across California, the Southwest and the nation’s midsection.
Amid production cuts in Hurricane Ida’s wake and festering storage worries, meanwhile, the October Nymex contract rallied throughout the week and settled at $4.712/MMBtu on Friday, up 8% from the prior week’s finish.
Forecasters anticipated cooler temperatures in the Midwest and East during the week ahead. But by the middle of the month, much of the country could again see summer-like conditions, fueling cooling demand, Bespoke Weather Services said.
This is “rather typical of a La Niña base state at this time of the year,” the forecaster said. “Obviously, absolute temperatures will not be where they were in the middle of summer, but demand is demand, and it does look to run above normal levels especially as we move into the middle third of the month, as upper level ridging returns to the eastern U.S.”
Natural gas futures forged higher during the week as supply/demand imbalance concerns mounted.
After slamming into Louisiana, Ida forced energy companies in the Gulf of Mexico to shut in nearly all of the oil and gas produced in the region for much of the week. This dragged output below 90 Bcf on several days.
For most of July and August, output had already hovered just below the 93 Bcf/d level that Bespoke says is needed to align supply with demand following a scorching domestic summer and amid ongoing strong demand for U.S. exports of liquefied natural gas (LNG).
Cooling demand proved robust throughout the summer months and LNG volumes have held between 10 Bcf and 11 Bcf for months. Demand from both Europe and Asia for U.S. exports of the super-chilled fuel is expected to be strong through the winter because supplies on…
Read More: Weekly Natural Gas Prices Advance Despite Ida’s Impacts