August natural gas futures pushed higher in early trading Monday as weather forecasts turned hotter and U.S. LNG exports were expected to quickly rebound after a 2 Bcf/d dip from Hurricane Beryl.
Coming off eight straight lower sessions, the August Nymex contract was up 5.1 cents to $2.370/MMBtu at around 8:50 a.m. ET.
Beryl made landfall near Matagorda, TX, around 4 a.m. CT as a Category 1 storm with 80 mph winds, the National Hurricane Center (NHC) said. Beryl was expected to turn northeast and bring heavy rains along the Texas coast toward Houston, with a storm surge warning in effect from Mesquite Bay to Sabine Pass, NHC said.
Overall U.S. liquefied natural gas feed gas demand was estimated at 11.2 Bcf/d on Sunday and 11.1 Bcf/d on Monday, down from 12.9 Bcf/d on Saturday, according to Wood Mackenzie. The biggest impact of the storm was the shutdown of the Freeport LNG terminal, 40 miles to the northeast of Matagorda. Feed gas flows to the terminal fell from about 1.6 Bcf/d to near zero, the firm said.
“Traders will likely wait to assess damage from Beryl,” EBW Analytics Group analyst Eli Rubin said. “If no lasting damage occurred, a relief rally is overdue for technically oversold Nymex gas.” In addition to lost LNG demand, opaque industrial demand “is down significantly,” he said. Flooding across Houston and the South Central region “could wreak further havoc,” he said.
Houston electric and natural gas utility CenterPoint Energy Inc. said more than 1.3 million customers were without power as of 7:44 a.m. CT.
“Expect that number to increase as Beryl pushes inland,” independent Houston forecaster Space City said. Tropical storm force winds were already evident across much of the Houston region, with gusts of 60 mph or higher, the forecaster said.
The primary hurricane risk for LNG terminals has historically been the loss of power, according to Criterion Research Inc.’s James Bevan, vice president of Research. The Freeport and Cameron LNG terminals are the only Gulf Coast terminals tied into the power grid, while the other LNG facilities have their own generation, he said. Terminals with their own onsite power can bounce back faster after extreme weather events, he said.
Elsewhere on weather, forecast models added 3-4 cooling degree days (CDD) of national demand late last week and added another 3-4 CDDs over the weekend, NatGasWeather said. “Most of the United States is forecast to be near to hotter than normal late this week into next week with highs in the upper 80s to 100s for strong to very strong national demand.”
On the supply side, gas production pushed higher over the weekend. Lower 48 output was estimated at 103.0 Bcf/d on Sunday and 102.3 Bcf/d on Monday, Wood Mackenzie said.
The storm’s impact on off-shore gas production should be minimal because most of that output is in the central part of the Gulf of Mexico south of Louisiana and Mississippi, a market participant said on online energy platform Enelyst.
“The storm is just a demand killer,’ the participant said. “Freeport shut-in is for precaution. They should be able to come back quickly once the storm passes.”
