Natural gas prices have sunk on expectations of lower demand due to the impending cooler weather and lower liquefied natural gas (LNG) feed in the aftermath of Hurricane Laura passing through the U.S. Gulf Coast.
The benchmark Henry Hub price was down 5.87 per cent to $2.502 per million British thermal units (MMBtu). Ahead of Hurricane Laura’s landfall, oil producers in the Gulf had shut in more than 84 per cent of oil production and more than half of gas production, and the market was bracing for disruptions.
Ahead of the Hurricane Laura’s landfall, hedge funds and other money managers had increased their net long position – the difference between bullish and bearish bets – on natural gas by 4 per cent.
After Hurricane Laura, demand for natural gas to LNG export facilities has not recovered yet, and is still nearly half of what it was before the hurricane, according to estimates from Genscape reported by Natural Gas Intelligence.
Another bearish factor for natural gas prices is the weather forecast for cooler temperatures in some parts of the United States this week, with natural gas demand expected to be moderate, as weather systems with showers are expected to sweep across the northern and central U.S. Earlier in August, natural gas prices spiked amid heat waves across the United States. Natural gas prices had plunged to a 25-year low in June this year, as demand for gas plummeted on the milder temperatures, and the world remained awash with the fuel.