

Natural gas prices shot higher yesterday as the market priced in the impacts of what could be a massive storm. Tropical Storm Helene strengthened into a hurricane yesterday morning as it moved toward the northeastern Gulf of Mexico heading towards the Florida Gulf Coast. Producers began to shut in output and evacuate rigs ahead of Helene. Today’s expiring Oct contract settled 8.6 cents higher at $2.637 while the Nov contract gained 2.6 cents to settle at $2.817.

September is currently on track to record the lowest monthly injection in 25 years, leaving the market with a lower than expected level of gas in storage heading into winter.
Today’s storage report is expected to show a build of 53 BCF for the week ended Sep 20. This compares to last year’s injection of 82 BCF and the 5 yr avg injection of 88 BCF. If correct, stocks would rise to 3.498 TCF, 5% higher than last year and 7.3% above the 5 yr avg.
Forecasts yesterday showed Helene making landfall late today on Florida’s Gulf Coast as a potential category 3 or 4 hurricane. Utilities in the storm’s path have been preparing for widespread storm damage and extended power outages. About 17%, or 313 MMcf/day of offshore nat gas output had been shut in as of Sep 25. Total production has fallen back below 100 BCF/day, estimated this morning at 98.6 BCF/day, down 0.4 BCF/day from yesterday.

The market seems unconcerned over demand destruction risks from Helene. Power demand across the Southeast is expected to fall about 1.4 BCF/day through the weekend with potentially more than a million customers losing power. More important though, LNG facilities are likely be spared, leaving LNG feedgas demand near or above current levels of 12.3 BCF/day.
Trade could be volatile today ahead of storage data, Oct expiration and strengthening of Helene.

The October 24 natural gas contract reversed back higher on Wednesday following Tuesday’s sell off gaining .086 to close the day at 2.637.
Volume was low for a 2nd day at 91,605 contracts which could indicate this current rally may be losing upside momentum.
The October contract rallied up to a new weekly high at 2.690 overnight but is currently trading back under 2.650 50% retracement resistance.
If the rally continues, the 61.8% retracement of the June-July downtrend at 2.860 will become the next upside objective.
2.500 is near term support followed by the 10 day moving average at 2.450 today.
Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 66.82






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