Nymex Natural Gas Rises on Concern Gulf Storm Would Pare Output

Aug. 13 (Bloomberg) — Natural gas in New York advanced on concern a possible storm in the Gulf of Mexico would pare production and as traders bought contracts to cover bets prices would fall.

Gas for September delivery rose 25.2 cents, or 3.7 percent, to $7.072 per million British thermal units at 12:02 p.m. on the New York Mercantile Exchange. Gas has climbed about 21 percent since falling to $5.863 per million Btu on July 24, the low so far this year.

The U.S. National Weather Service in its midday outlook upgraded the weather disturbance offshore in the Atlantic to Tropical Depression Four. The system is located in the “far eastern Atlantic about 520 miles west-southwest of the southernmost Cape Verde Islands,” the service said.
In the Caribbean a tropical weather disturbance “could form later today or tomorrow,” the service said, advising that “interests in the western Gulf of Mexico should monitor the progress of this system.” A reconnaissance flight will take place tomorrow, if needed.

“Whether it’s justified or not, for now they’re putting a fear premium in for hurricanes,” said Ryan Moe, a risk management consultant for FC Stone LLC in Minneapolis.

Hot weather throughout Texas and much of the U.S. is also spurring greater demand for the power-plant fuel and supporting higher futures prices. Energy demand in the U.S. is expected to run 12 percent above normal over the next seven days, according to Belton, Missouri-based Weather Derivatives.

Bloomberg