Natural Gas News: Prices Rise on Hurricane Francine’s Potential to Disrupt Supply

Natural Gas Futures Rise as Traders Eye Hurricane Francine

U.S. natural gas futures moved higher on Wednesday, driven by conflicting weather reports and the looming threat of Hurricane Francine. After recovering from Tuesday’s dip to $2.125, prices climbed back to key levels of $2.158 and $2.252. Traders are focused on the storm’s potential to disrupt Gulf of Mexico production, while also assessing the risk of reduced demand from cooler temperatures and power outages in the southern U.S.

At 12:23 GMT, Natural Gas futures are trading $2.272, up $0.40 or +1.79%.

Hurricane Francine’s Potential Market Impact

Hurricane Francine is expected to make landfall in Louisiana, bringing heavy rain, strong winds, and flooding, according to NatGasWeather. The storm poses a complex scenario for traders: while cooler temperatures and potential power outages could dampen demand, a disruption in natural gas production and liquefied natural gas (LNG) cargoes could provide upward price pressure.

The natural gas market remains volatile, as traders attempt to gauge whether the storm will cause a net loss in demand or disrupt production enough to drive prices higher. The market’s cautious positioning reflects the uncertainty of the hurricane’s path and its potential impacts on both supply and demand.

Storage Levels and Production Trends Limit Price Gains

Despite the weather-related uncertainties, natural gas futures are facing resistance from high storage levels and steady production. The U.S. Energy Information Administration (EIA) reported an injection of 13 billion cubic feet (Bcf) into storage for the week ending August 30, bringing total storage to 3,347 Bcf. This is 208 Bcf higher than last year’s levels and 323 Bcf above the five-year average, creating a significant supply overhang.

At the same time, U.S. production has dipped below 100 Bcf per day, which has provided some underlying support for prices. However, the high storage levels continue to act as a cap on any significant upward movement.

Weather Outlook and Demand Trends

Looking ahead, NatGasWeather forecasts moderate national demand over the next seven days, with very warm to hot conditions expected in the western and central U.S., where temperatures will range from the mid-80s to 100s. Meanwhile, cooler weather will dominate the Great Lakes and East, where temperatures are expected to range between the 60s and 80s. The Southeast, including Texas, will remain hot, although cooler conditions in the South due to Hurricane Francine could moderate demand further.

Overall, the short-term weather forecast suggests only moderate demand for natural gas, which could limit any immediate price spikes.

Market Forecast: Cautiously Bullish

In the short term, the natural gas market is leaning bullish as traders monitor Hurricane Francine’s potential to disrupt production. Key pivot levels to watch are $2.252 and $2.158, with the 50-day moving average at $2.318 serving as a critical resistance level and potential trigger point for an acceleration to the upside.

Should the storm significantly impact supply, prices could rally further, but if demand reduction outweighs production disruption, the market could pull back.

The overall outlook remains cautious, with storage levels and production trends keeping a lid on sustained price gains.