(Oil Price) – U.S. natural gas futures jumped over 10% to $2.94/MMBtu in Monday’s trading session after production disruption in the Gulf of Mexico in the wake of Hurricane Rafael. According to the U.S. Bureau of Safety and Environmental Enforcement (BSEE), 482,790 barrels of oil and 310 million cubic feet of natural gas, representing more than 25% of oil and 16% of natural gas output, were still shut in.
Further, two drilling vessels were displaced while 37 out of 371 manned platforms (around 10%) remained evacuated. Total production losses in the U.S. have so far reached 2.07 million barrels of oil and 1.12 billion cubic feet of natural gas. Rafael has been downgraded to a tropical storm after making landfall in the Gulf as a major hurricane; however, the US National Hurricane Center has warned it could linger in the central Gulf before shifting south and southwest early in the week.
In its October short-term energy outlook (STEO), the EIA forecast Henry Hub spot prices would average $3.06/MMBtu in 2025. On a quarterly basis, the EIA predicted in the October STEO that Q4 2024 Henry Hub spots prices would average $2.81/MMBtu, and $3.16/MMBtu in Q1 2025, dipping lower in Q2 and then up to $3.35/MMBtu in Q4.
Meanwhile, European natural gas futures surged to €43.8 per megawatt-hour, their highest level in one year, driven by colder weather forecasts. Lower temperatures have increased heating demand, with Europe’s gas reserves being depleted at a faster rate. According to Gas Infrastructure Europe (GIE) data, EU gas storage is now at 93% capacity, lower than typical for this time of year. In contrast, a year ago, Europe’s gas stores were nearly full.
On the supply side, the continent’s gas flows have increased slightly, supported by higher exports from Norway coupled with deliveries from Russia via Ukraine. Europe’s LNG imports have jumped 17% month-on-month, driven by pre-winter restocking efforts.
By Charles Kennedy for Oilprice.com
