Natural Gas News: Futures Slide as Hurricane Milton Poses Risk to Energy Demand

Natural Gas Futures Decline as Hurricane Milton Threatens Demand Destruction

Natural gas futures plunged on Monday as traders responded to the potential for significant demand destruction caused by Hurricane Milton’s approach toward Florida. After reaching a multi-month high of $3.019 last week, natural gas prices faced resistance between $2.937 and $3.110 and dropped sharply as the storm threatened to impact energy consumption in the affected regions.

At 14:01 GMT, Natural Gas futures are trading $2.760, down $0.094 or -3.29%.

Market Stalls on Hurricane Fears

November Nymex natural gas futures declined significantly as Hurricane Milton intensified over the weekend, posing serious risks to Florida’s Gulf Coast. The market initially showed strength last week, with prices nearing $3.00 on two occasions, but failed to maintain momentum, retreating as Milton developed into a powerful Category 4 storm. Eli Rubin, senior analyst at EBW Analytics, noted that the market’s retreat coincided with the storm’s emergence, halting the bullish advance.

Bearish Technical Signals and Key Levels

Last week’s technical reversal in natural gas futures continues to weigh on the market. The failure to breach the $3.00 mark and subsequent drop in prices confirmed a bearish reversal, with support levels now being tested. Monday’s break below $2.825 reinforced this bearish outlook, placing downside targets at $2.711, $2.662, and $2.610 in focus. Traders are now eyeing these critical levels as potential pivots, with further declines possible if Hurricane Milton exacerbates demand concerns.

Hurricane Milton Threatens Florida’s Energy Infrastructure

Hurricane Milton, now a Category 4 storm with winds exceeding 150 mph, is projected to make landfall in Florida later this week, bringing severe storm surges, destructive winds, and heavy rainfall. The National Hurricane Center warned of life-threatening conditions, with storm surges reaching up to 12 feet in some areas. Florida’s western Gulf Coast, including Tampa Bay, is under a hurricane watch, with officials urging evacuations in vulnerable regions. The storm’s intensity, while expected to weaken slightly before landfall, will still bring widespread impacts to the state, which is recovering from previous storms.

Impacts on Natural Gas Supply and Demand

While the storm poses immediate threats to energy demand in the region, supply factors are also in play. Lower production levels have already been trimming gas supply, but the looming destruction from Hurricane Milton could temporarily stifle demand from industries and residential sectors. Additionally, rainfall of up to 15 inches is forecast for parts of Florida, which may lead to significant flooding and further depress energy usage.

Market Forecast: Bearish Outlook for Natural Gas

The outlook for natural gas remains bearish in the short term, given the combined factors of technical weakness and the potential for Hurricane Milton to disrupt demand in Florida. If key support levels around $2.711 to $2.610 are breached, further downside pressure could emerge. While lower production might offer some price support, the demand destruction anticipated from the storm is likely to dominate the near-term market sentiment, keeping prices under pressure until the situation stabilizes.