Natural Gas Futures Climb Early Amid Strength in LNG as Another Storm Expected to Enter GOM - Natural Gas Intelligence

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Estimates showing strengthening liquefied natural gas (LNG) demand boosted gas futures in early trading Monday, while yet another named storm could threaten production and exports later this week. The November Nymex contract was up 8.8 cents to $2.526/MMBtu at around 8:45 a.m. ET.

Data as of early Monday showed feed gas flows to U.S. LNG terminals climbing above the 8.0 Bcf/d mark, according to Bespoke Weather Services.

“Price action this week could be tricky, with lots of moving parts,” Bespoke said. “The supply/demand balance is tight, but it has to be in order to avoid containment, at least in the salts.”

Also potentially factoring into prices this week is a tropical cyclone churning in the Caribbean, the firm noted, pointing to possible threats to both LNG and production in the Gulf Coast region.

The National Hurricane Center (NHC) as of 8 a.m. ET Monday was tracking Tropical Storm Delta, spotted about 130 miles south of Jamaica. The storm, expected to strengthen into a hurricane, was forecast to move into the southeastern Gulf of Mexico Tuesday night or early Wednesday.

According to the NHC’s probable path for the storm, Delta could reach the Louisiana coast by Friday or Saturday.

The looming threat of yet another major storm charting a course for the Gulf Coast comes as Sempra Energy’s Cameron LNG terminal, where activity has been disrupted since Hurricane Laura knocked out power in the region in late August, is showing signs of resuming normal operations.

On Sunday “an LNG tanker docked at Cameron for the first time in 43 days,” according to analysts at EBW Analytics Group. “Feed gas flows also continued to climb at Freeport and Sabine Pass.

“The speed with which Sempra will be able to ramp up production at Cameron remains unclear. With Freeport operating three trains, though, and Sabine Pass already close to 4 Bcf/d, the return of feed gas at Cameron could start to tighten up the cash market and reduce fears regarding the continued increase in South Central storage — letting the forward curve recover a significant share of its recent losses.”

As for the latest weather outlook, Bespoke observed only small adjustments trending toward lower demand for the next two weeks.

“We continue to project a very tame weather pattern for the month of October as a whole,” the firm said. 

November crude oil futures were up $1.44 to $38.49/bbl at around 8:45 a.m. ET, while November RBOB gasoline was up about 5.5 cents to $1.1781/gal.

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