Analysts Say Natural Gas Prices Are Falling Due to GOM Storm

Analysts Say Natural Gas Prices Are Falling Due to GOM Storm
'Right now, Cameron Parish is near the center of the cone of uncertainty for Six's path, with Sabine Parish on the outer edge of that cone', Energy Aspects' Head of North American Gas warned.
Image by Andrey Shadrin via iStock

David Seduski, Head of North American Gas at Energy Aspects, told Rigzone on Monday that “natural gas prices are falling due to the formation of Tropical Cyclone Six in the Gulf of Mexico”.

“It will likely soon be Tropical Storm Francine, and NOAA (National Oceanic and Atmospheric Administration) expects it will make landfall somewhere in Louisiana on Wednesday late afternoon,” Seduski said.

“Right now, Cameron Parish is near the center of the cone of uncertainty for Six’s path, with Sabine Parish on the outer edge of that cone,” he added.

“A landfall anywhere in Louisiana would disrupt LNG tanker loadings, and closer to the Cameron, Calcasieu Pass (also in Cameron Parish) or Sabine Pass terminals could cause a facility to shut down and dent demand further,” Seduski warned.

The Energy Aspects representative told Rigzone that it is too early to know the exact impacts of the storm. He added that LNG feedgas is expected to be a key pillar of structural gas demand this fall as cooling demand wanes.

“Sabine Pass and Cameron are two of the largest U.S. exports terminals, and even a brief shutdown of operations at either would back up inventories in an already congested storage situation in the South Central,” he added.

Frederick J. Lawrence, the ex-Independent Petroleum Association of America (IPAA) Chief Economist, told Rigzone on Monday that “the storm and associated gas demand risk have sent natural gas prices down today after a more bullish gas storage report last week”. 

Also today, Art Hogan, Chief Market Strategist at B. Riley Wealth, outlined to Rigzone that natural gas market sentiment “remains bearish due to strong production and high storage levels”.

“With storage levels 323 billion cubic feet above the five-year average, natural gas prices continue [to] struggle,” Hogan told Rigzone.

“Mild weather across most of the U.S. is limiting demand,” he added.

Paul Sankey, Lead Analyst at Sankey Research, highlighted to Rigzone on Monday that “U.S. natgas has 3-4 percent spare production capacity available almost immediately”.

In its latest weekly natural gas storage report, which was published on September 5, the U.S. Energy Information Administration (EIA) stated that working gas in storage was 3,347 billion cubic feet as of Friday, August 30, 2024, according to EIA estimates.

“This represents a net increase of 13 billion cubic feet from the previous week,” the report noted.

“Stocks were 208 billion cubic feet higher than last year at this time and 323 billion cubic feet above the five-year average of 3,024 billion cubic feet. At 3,347 billion cubic feet, total working gas is within the five-year historical range,” it continued.

Lawrence outlined to Rigzone last week that the “weekly build” in the EIA’s latest natural gas storage report “came in below expectations”.

Energy Aspects’ website notes that the company offers “deep, sector-specific insights and analysis of the macro developments that guide market players”.

“Over 600 organizations, including oil majors, producers, refiners, trading houses, governments, hedge funds and utilities, rely on our intelligence and data,” the site states.

The IPAA has represented independent oil and natural gas producers for more than 90 years, according to the IPAA site. Lawrence worked at the organization for more than 20 years, his social media shows.

B. Riley Wealth’s website notes that Hogan’s “distinguished financial industry career spans 30+ years, during which he has concentrated on the U.S. equity markets”. Hogan has served as a member of the Board of Governors of Boston Stock Exchange, Inc., and a member of the Board of Directors of NASDAQ OMX BX, Inc, the site highlights.

B. Riley Wealth offers a world-class wealth management and financial planning platform designed to provide clients with a full suite of services including brokerage, investment management, insurance and tax preparation services, the company’s website states.

Sankey is described on Sankey Research’s site as a “widely followed oil analyst who was first to call for negative oil prices when Covid began impacting world markets”. The site describes Sankey Research as an independent research company.

To contact the author, email andreas.exarheas@rigzone.com


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Andreas Exarheas
Editor | Rigzone