While the U.S. has passed the peak of hurricane season, the Southeast is still grappling with the aftermath of Hurricane Helene, and now, Hurricane Milton—one of the strongest storms on record—is poised to hit Florida. In this month’s newsletter, we delve into how these weather events, along with ongoing geopolitical tensions, are affecting the natural gas market.

Domestic Demand

While the U.S. saw overall demand dip 3.1 percent from the previous week of September 23rd, demand remained 1.9 percent above last year at 95.9 billion cubic feet per day (Bcf/d).  Natural gas consumption for power generation continues to remain robust at 38.6 Bcf/d. Natural gas continues to be the power source of choice for power generation due to low natural gas prices and its ability to balance out the intermittent nature of renewable energy. According to a recent article by the Energy Information Administration (EIA), the U.S. set a record level of electricity generated from natural gas of more than 7 million megawatt hours (MWh) on August 2.  

With Hurricane Milton approaching Florida, natural gas future prices fell by 4 percent on October 7th as traders anticipated a drop in demand due to disruptions in electricity services in central Florida.

International Demand  

As we look at the international markets, geopolitical conflicts continue to impact U.S. liquified natural gas exports (LNG). Recently, three U.S. LNG cargoes were redirected from Asia to Europe due to more favorable European prices due to growing conflicts in the Middle East, according to ship-tracking data from Bloomberg and Kpler. European natural gas prices reached their highest last Friday, October 4th, with concerns over European supply risks driving this surge.  

The International Energy Agency (IEA) highlighted the impact of global tensions in its Global Gas Security Review 2024 report and notes that global demand is expected to reach record levels in 2024 and 2025.

Production & Supply  

The U.S. finished last year’s heating season with natural gas in storage 38.9 percent above the five-year average.  With continued cuts in production, as producers tried to bring prices up, the U.S. is currently at 3,547 Bcf, which is just 5.7 percent above the five-year average.  Although the U.S. saw a slight 3.1 percent increase in natural gas rigs last week, it remained 14.7 percent under this time last year.

‍If you have any questions about the information in this newsletter or would like to talk to someone about your natural gas, please call your sales representative.

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