HomeNewsHelene Batters U.S. Southeast, Pushing Natural Gas Prices to 14-Week High

Helene Batters U.S. Southeast, Pushing Natural Gas Prices to 14-Week High

9/30/2024

(Reuters) — U.S. natural gas futures jumped about 5% to a 14-week high on Friday as Hurricane Helene battered the U.S. Southeast after causing Gulf of Mexico producers to cut output and knocking out power to millions of customers in Florida, Georgia and the Carolinas.

Energy traders noted that prices were also supported as the amount of gas flowing to Venture Global's Plaquemines LNG export plant in Louisiana was on track to match a high of around 35 million cubic feet per day that it hit in mid-August. That is still a very small amount of gas. The first phase of the Plaquemines project will have the capacity to turn about 1.8 billion cubic feet per day of gas into LNG.

Analysts have said the plant could start producing LNG in test mode over the next month or so. Officials at Venture Global were not immediately available for comment.

Another factor analysts have noted that has supported prices in recent weeks was that storage injections in July, August and so far in September were at record lows, according to federal energy data going back to 1997. That is because many producers cut output earlier this year after average spot monthly prices at the U.S. Henry Hub <NG-W-HH-SNL> benchmark in Louisiana fell to a 32-year low.

On its first day as the front-month, gas futures <NGc1> for November delivery on the New York Mercantile Exchange rose 14.9 cents, or 5.4%, from where they traded on Thursday to settle at $2.902 per million British thermal units (mmBtu) on Friday, their highest close since June 18.

That, however, was up about 12% from where the less expensive October contract closed when it was still the front-month on Thursday.

That expiration-caused price increase pushed the front-month back into technically overbought territory for the third time this week after hitting that level on Monday and Wednesday.

For the week, the contract was up about 19%, putting it on track for a fifth week of gains for the first time since April 2022. During that time, the front-month has gained about 43%.

The U.S. National Hurricane Center forecast the remnants of Helene, now a tropical depression, would remain over Tennessee and Kentucky over the weekend.

There were currently about 4.6 million homes and businesses without power, mostly in Florida, Georgia and the Carolinas, from Helene. That is down from around 5.2 million affected by the storm as utilities in Florida, Georgia and South Carolina have been able to restore service to some customers since the storm slammed into the Florida Panhandle late Thursday.

Although storms are more likely to reduce gas prices and demand through power outages and shutting of liquefied natural gas export plants, analysts said this storm was on track to miss the LNG plants.

That means demand for gas from those LNG export plants should remain high at the same time that some Gulf Coast producers have cut output. The U.S. Bureau of Safety and Environmental Enforcement said that about 18%, or 0.3 bcfd, of gas production in the U.S. Gulf of Mexico was still shut-in for Helene.

More than 75% of U.S. gas production still comes from big inland shale basins like Appalachia in Pennsylvania, West Virginia and Ohio and the Permian in West Texas and eastern New Mexico, so most of the country's gas output should remain safe from the storm.

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