Gas Petrospective – September 1, 2010

Natural gas prices were fractionally higher yesterday as follow-through buying kept prices from immediately turning back down, again. Nonetheless, the buying interest, which had been fairly good on Monday, cooled noticeably yesterday as the likelihood of major tropical events interrupting natural gas production, gathering or distribution started to appear more remote.

In many respects, trading yesterday was a matter of tempering possibilities with the odds. Traders were still reacting to much hotter temperature readings across large parts of the country, but these readings are not going to remain sustained. Autumn is coming, and the probability that temperatures will remain hot is low.

Traders are keeping their eyes on the progress of Hurricane Earl, which is packing a punch and which may or may not make landfall along the US Atlantic Coast. Hurricane warnings extend from the Carolinas to New Brunswick and we will not really know how severe the storm will be from the Chesapeake Bay to Cape Cod. It could be a rare hurricane landfall, a series of intense storms or just a heavy wind by this weekend. Forecasters do not see any threat to the oil and gas producing zones in the northern US Gulf. But, with Fiona following on Earl’s footsteps, there is still a chance that we could see output interruptions next week.

That chance seems low, right now, with National Hurricane Center (NHC) meteorologists expecting Fiona to follow the north-northeasterly curl taken by Daniele and seen as the most likely path for Earl. Behind Fiona, there is a system of thunderstorms over west Africa that currently has a low probability of cyclonic formation.

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