U.S. natural gas hits fresh 9-month high as hurricane heads for Gulf of Mexico

U.S. natural gas futures were on track to hit a fresh nine-month high on Tuesday with daily output expected to fall to its lowest since May as producers shut offshore wells in the Gulf of Mexico before Hurricane Laura hits the region later this week.

That higher price move came despite forecasts for less demand over the next two weeks than previously expected as vessels carrying liquefied natural gas (LNG) steered clear of U.S. Gulf of Mexico LNG export terminals.

Hurricane Laura is expected to strengthen into a major Category 3 hurricane with maximum sustained winds of 115 miles per hour (185 kilometers per hour) before hitting the Gulf Coast near the Texas-Louisiana border, while the remnants of Tropical Storm Marco continue to swirl off the Louisiana coast.

Front-month gas futures rose 1.2 cents, or 0.5%, to $2.525 per million British thermal units at 8:39 a.m. EDT (1239 GMT). On Monday, the contract closed at its highest since Nov. 25.

Although U.S., European and Asian gas contracts mostly trade on their own fundamentals, a 40% jump in prices at the Netherlands Title Transfer Facility (TTF) in Europe and a 53% increase at the Japan-Korea Marker (JKM) in

Asia so far in August have made U.S. LNG more attractive in global markets, which helped push U.S. gas futures up about 40% this month.

On a daily basis, U.S. LNG exports were on track to fall to a two-week low of 4.1 billion cubic feet per day (bcfd) as Hurricane Laura heads toward the nation's biggest LNG export terminal, Cheniere Energy Inc's Sabine Pass in Louisiana.

On a daily basis, U.S. output was on track to fall to a three-month low of 84.9 bcfd, according to preliminary data from Refinitiv that is subject to change later in the day.

 

(Reporting by Scott DiSavino)

 

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