U.S. Natural-Gas Futures Performance and the Impact of Hurricane Idalia on Energy Production

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U.S. natural-gas futures closed lower on Tuesday, marking a loss for the month. Despite the impending arrival of Hurricane Idalia on the Gulf Coast of Florida by Wednesday, energy production is expected to remain largely unaffected.

However, the aftermath of the storm could potentially decrease power demand as recovery efforts begin later this week.

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Australian Strike Threat and Its Implications for the European Natural Gas Market

In Europe, the natural gas market has been closely monitoring a pending strike among workers at selected Chevron Corp. facilities in Australia. The Offshore Alliance, comprising the Australian Workers’ Union and Maritime Union of Australia, announced on Tuesday that its members would be engaging in rolling stoppages, bans, and limitations at Chevron’s three west coast Australian facilities beginning on Sept. 7.

Woodside Energy, on the other hand, reached a preliminary agreement last week with workers at its natural-gas export facilities in Australia, successfully averting a strike.

Gary Cunningham, director of market research at Tradition Energy, explained that the Australian strike threat was more concerning when there was a possibility of a complete work stoppage at all facilities. However, since Woodside has already resolved its issues with the unions and negotiations are still ongoing regarding Chevron’s sites, the impact on U.S. markets has been minimal.

Conclusion

Although U.S. natural-gas futures experienced a decline with Hurricane Idalia on the horizon, it is expected to have limited effects on energy production. Meanwhile, the European natural gas market has been keeping an eye on the potential consequences of a strike at Chevron facilities in Australia. While Woodside Energy has managed to resolve its labor concerns, negotiations continue regarding Chevron’s sites, ultimately influencing U.S. markets to a lesser extent.

Natural Gas Market Update

On the New York Mercantile Exchange, natural-gas futures for September delivery settled at $2.56 per million British thermal units on the contract’s expiration day. Prices based on the front months have lost 3% month to date, according to Dow Jones Market Data.

Weather Impacting U.S. Markets

The main driver behind the sell-off in U.S. markets is the weather. A more mild outlook for the end of summer, with limited heat in certain areas of the country, has led to traders shorting gas. They are concerned about regional storages becoming full and prices being depressed in early winter. Additionally, the strengthening El Nino pattern is expected to bring mild weather to the northeastern U.S. in early winter, further weakening the markets.

European Market Insights

In Europe, benchmark Dutch TTF natural gas for October delivery traded at 41.527 euros ($45.21) per megawatt hour on Monday, up from 37.817 euros on Friday. European prices are influenced by news out of Australia, particularly the Chevron facilities that represent around 5% of global supply. However, the ample supply of liquefied natural gas (LNG) currently stored in barges ensures that there will likely be no shortage of LNG cargoes to buy for the next couple of months.

Hurricane Idalia’s Influence

Hurricane Idalia approaching the Gulf Coast of Florida may have a bearish influence on natural-gas prices rather than a bullish one. Damage to infrastructure from the hurricane could lower gas consumption for power generation in the coming weeks.

Read: Tropical Storm Idalia heads for Florida; Citgo fuel contamination problem strikes first

The impacts of the hurricane may be slightly bearish as it could lower gas consumption for power generation in the coming weeks.

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