NEW YORK: US natural gas futures edged up about 1% on Wednesday on a drop in daily output so far this month due to pipeline issues and the evacuation of some oil and gas platforms in the Gulf of Mexico ahead of Hurricane Rafael, and on forecasts for slightly cooler weather and higher heating demand next week than previously expected.
Front-month gas futures for December delivery on the New York Mercantile Exchange (NYMEX) rose 3.5 cents, or 1.3%, to $2.705 per million British thermal units (mmBtu) at 8:41 a.m. EDT (1341 GMT).
Open interest in NYMEX futures, meanwhile, rose to a record high for a fourth day in a row, reaching 1.778 million contracts on Nov. 4.
In other news, Donald Trump was elected US president, capping a remarkable comeback four years after he was voted out of the White House.
The US National Hurricane Center forecast Rafael would slam into Cuba later Wednesday as it moves from the Caribbean Sea into the Gulf of Mexico. By Sunday, Rafael is expected to weaken back into a tropical storm before making landfall in the US Gulf Coast near Louisiana or Texas next week.
Hurricanes can boost gas prices by cutting output, although only about 2% of the nation’s gas comes from the federal offshore Gulf of Mexico area. But hurricanes can also reduce prices by destroying demand for gas through power outages and knocking liquefied natural gas (LNG) export plants out of service. Some storms do both.
In the spot market, pipeline constraints caused next-day gas prices at the Waha hub in the Permian Shale in West Texas to remain in negative territory for a fifth day in a row and a record 45th time this year.
Analysts said recent constraints were caused by maintenance on Kinder Morgan’s Permian Highway gas pipe in Texas that was expected to continue through mid-November.
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