Hurricane Florence Approaches The Southeast As Gas Continues Weak Bounce

The October natural gas contract bounced again today, though this bounce appears to be independent of the impending Hurricane Florence landfall in the Southeast. 

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Meanwhile, confidence in Hurricane Florence making a landfall somewhere in the Southeast as a major hurricane only continues to increase, as seen in the latest forecast from the National Hurricane Center. 

The most recent model guidance has moved very slightly south of earlier National Hurricane Center forecasts, with landfall across southern North Carolina or northern South Carolina most likely but a larger array of scenarios still remaining on the table. 

We continue to track the supply and demand impacts from Florence in the natural gas market. One piece of information we have noticed is that recent rainfall forecasts show most of the heavy rain likely remaining out of the Marcellus/Utica reason, which should limit production disruptions at least through the next 7 days. However, these forecasts are liable to change and we continue to track them closely. 

All things equal we saw "risk slightly higher towards $2.85 first over another test of $2.75 short-term" due to a number of factors including slight overnight GWDD additions. 

This verified well as the October contract peaked at $2.836 and the V/X spread flipped positive. 

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We see this move coming despite Florence rather than instead of it, as demand destruction from Florence is more likely to hurt physical prices across the East. Still, the extent of market impacts from Hurricane Florence remains quite uncertain, as models differ in key ways on the exact track, speed, and intensity of the storm. We will continue to track the storm closely, as the exact track and intensity inland will determine the resulting power demand impact. Of course, we wish our best to all those that are in the path of this very dangerous storm, and advise to take all warnings very, very seriously due to the potential this storm has (satellite image from the Penn State Electronic Wall Map site).