Natural gas prices are trading sharply lower amid uncertainty over the impact of a hurricane that is growing in terms of size and wind speed over the Gulf of Mexico.
After brushing past the west coast of Florida as a tropical storm late Monday afternoon, the tropical storm quickly developed into Hurricane Gordon
and appears to be headed toward Gulf coast natural gas and crude oil operations near the coast of Louisiana.
At 1300 GMT, October Natural Gas futures are trading $2.85, lower by 6.3 cents.
According to reports, Hurricane Gordon threatens to spread flooding rains into the Mississippi Delta and Midwest later this week.
“Strengthening is expected today, and Gordon is forecast to be a hurricane when it makes landfall along the north-central Gulf Coast,” according to the National Hurricane Center advisory. “Rapid weakening is expected after Gordon moves inland.”
Gordon is expected to pass through the eastern edge of the Gulf’s offshore oil and natural gas platforms where it will probably have little impact because it isn’t that strong and will pass through the area quickly, according to the Commodity Weather Group.
Additionally, crews were pulled off two platforms by the Anadarko Petroleum Corp., according to their website.
We’re expected a volatile two-sided trade early this week as investors react to the hurricane news. Since the hurricane is a fast-moving event, natural gas traders should return to normal fundamentals fairly quickly.
The price action the rest of the week should continue to be driven by concerns over a potential storage deficit at the start of the winter heating season in November.