Hi Mike,
Not that I wish you any ill wind, but....
DJ US GAS: Futures Close Higher Amid Tropical Storm Threat
By Jason Womack
Of DOW JONES NEWSWIRES
HOUSTON (Dow Jones)--Natural gas futures rose Wednesday in anticipation of
Tropical Storm Gustav entering the Gulf of Mexico at hurricane strength.
Natural gas for September delivery on the New York Mercantile Exchange closed
20.7 cents higher, or up 2.5%, at $8.485 a million British thermal units. The
contract rose as high as $8.777/MMBtu in combined electronic and floor trading.
"The storm trumps everything," said Mike Fitzpatrick, a broker with MF Global
in New York. "That's the only consideration at this point."
Tropical Storm Gustav, which weakened overnight, was expected to reach
hurricane strength as it moved into the Gulf of Mexico, a key U.S. energy
production region.
The Gulf accounts for a quarter of U.S. oil production and 14% of natural gas
production. It is also home to about a third of the country's refining
capacity.
The energy markets closely watch storms that have the potential to threaten
the Gulf and disrupt energy supplies as Hurricanes Rita and Katrina did in
2005.
The storm was tracking directly over the Independence Hub, a key natural gas
production platform in the Gulf.
Scott Hanold, an analyst with RBC Capital Markets, projected that the storm
would have a potential impact of 10 million barrels of oil and 60 billion cubic
feet of natural gas.
Jim Rouiller, senior energy meteorologist with the private forecasting firm
Planalytics, expected Gustav to achieve at least a Category 3 status by the
time it reached the Gulf of Mexico over the Labor Day weekend.
"This storm remains likely to explode into a major hurricane over the
northwestern Caribbean on Friday," Rouiller wrote in a note to clients.
Traders were buying back gas contracts in order to hedge against the storm
threat and to prepare for the holiday weekend, when the Nymex trading floor
will be closed.
"It makes it very difficult to go home short on Friday," said George Hopley,
an energy analyst with Barclays Capital in New York.
Prices rose Wednesday despite expectations for an above-average build in
natural gas storage. The U.S. Energy Information Administration is expected to
report Thursday that 83 billion cubic feet of natural gas were added to storage
for the week ended Aug. 22, according to analysts and traders surveyed by Dow
Jones Newswires.
The estimated storage build is well above the five-year average of 40 bcf and
last year's 38 bcf build, according to the EIA.
Wednesday also marked the expiration of the September natural gas futures
contract.
However, the build in storage and the expiration of the contract were having
little effect on prices.
"I think that would have been priced in earlier, before Gustav formed," said
Lisa Zembrodt, a commodity analyst with Summit Energy in Louisville, Ky.
-By Jason Womack, Dow Jones Newswires; (713) 547-9201;
jason.womack@dowjones.com
|
