Natural-gas futures on track for a more than 50% quarterly gain

By Myra P. Saefong

Forecast for an active Atlantic hurricane season raises potential for supply disruptions

Natural-gas futures finished lower on Thursday but traded more than 50% higher for the quarter, finding support from the possibility that an active Atlantic hurricane season will disrupt U.S. production.

In the U.S., production is "ample" and there's "plenty of gas in storage," but there are also forecasts for a more active Atlantic hurricane season, Beth Sewell, president and chief executive officer at Quantum Gas & Power Services, told MarketWatch Thursday, adding that Houston has already seen its first tropical storm. Tropical Storm Alberto made landfall in Mexico last week.

In energy dealings Thursday, natural gas for August delivery (NG00) (NGQ24) lost 6 cents, or 2.2%, to settle at $2.69 per million British thermal units on the New York Mercantile Exchange. Prices based on the front month, however, were 52.3% higher quarter to date, poised for the strongest quarterly rise since the quarter that ended in September 2021, according to Dow Jones Market Data. They were also up 6.8% year to date.

Prices based on the most-active contracts were 51.7% higher for the second quarter, on track to post the best quarterly performance since the quarter that ended in March 2022.

The U.S. doesn't have that much offshore production these days, but that production would be shut in ahead of hurricanes, taking some supply offline, said Sewell.

In late May, forecasters at the National Oceanic and Atmospheric Administration predicted above-normal hurricane activity in the Atlantic basin this year. The Atlantic hurricane season runs from June 1 through Nov. 30. NOAA predicted an 85% chance of an above-normal season, with a range of 17 to 25 total named storms, with eight to 13 of those likely to become hurricanes.

Meanwhile, a "good portion of the U.S. continues to have above-average temperatures for this time of year, which drives cooling demand and power generation to support it," said Sewell.

She also said there are forecasts for moderating temperatures, which may send prices lower by a bit, but not back to the lower prices from a few months ago.

On Thursday, data released by the Energy Information Administration showed an increase of 52 billion cubic feet in U.S. natural-gas supplies in storage for the week that ended June 21.

That nearly matched the average 51 bcf increase forecast by analysts surveyed by the Wall Street Journal.

Inventories, however, remain more than 20% above the seasonally average levels for this time of year, Robbie Fraser, manager for global research and analytics at Schneider Electric, said in a daily note.

Working gas in storage was at 3.097 trillion cubic feet last week - 314 bcf higher than last year at this time and 528 bcf above the five-year average, according to the EIA.

Looking ahead, Sewell said natural-gas prices may not have peaked just yet, mostly due to "summertime cooling and generator maintenance."

-Myra P. Saefong

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-27-24 1504ET

Copyright (c) 2024 Dow Jones & Company, Inc.