FX.co ★ US Natural Gas Prices Rise to 2-Week High

US natural gas prices climbed more than 2% to $3.27/MMBtu, advancing for a fifth consecutive session to reach a two-week high. The rally was driven by lower output and mounting concerns over potential storm-related supply disruptions in the Gulf of Mexico.

Production in the Lower 48 states has averaged 111.5 bcfd so far in October, down from the record 113.3 bcfd recorded in both August and September. The decline reflects, in part, recent force majeure declarations and other pipeline disruptions in Kentucky, Texas, and West Virginia.

Market participants are closely watching Tropical Storm Isaias, which is forecast to strengthen into a hurricane and make landfall along the Gulf Coast on Friday. Such storms can curtail Gulf Coast gas production and support prices, but they may also dampen demand if LNG export facilities are forced to shut or if widespread power outages reduce gas consumption.

At the same time, daily feedgas flows have increased, with Freeport LNG stepping up gas intake following the restart of a liquefaction train that had been offline for maintenance. Prices also drew support from expectations of a smaller-than-normal increase in weekly gas storage, with official data due later in the day.