Natural Gas Surges in New York on Hurricane Threat, Heat Wave

Natural gas soared in New York on concern that Tropical Storm Chris may strengthen into the season’s first hurricane and track toward the Gulf of Mexico, where about a quarter of U.S. gas is produced.

The threat of the storm, which is forecast to become a hurricane today or tomorrow, comes amid the worst heat wave in five years in the Northeast. Power plants burn more gas during periods of hot weather to meet air-conditioning needs.

“Prices are up sharply on dual concerns: the potential threat to supply from an imminent Hurricane Chris, and a surge in weather induced demand,” said Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina. “The prospect of a hurricane that could shut in production is exacerbating price moves.”

Gas for September delivery rose 70.1 cents, or 9.3 percent, to $8.275 per million British thermal units as of 9:24 a.m. in New York Mercantile Exchange electronic trading. The price has rallied 15 percent this week.

Chris’s maximum sustained winds had increased to 65 miles per hour, up from 40 yesterday, according to an 8 a.m. bulletin from the National Hurricane Center. A storm becomes a hurricane when wind speeds reach 74 miles an hour. The center of the storm was about 65 miles north of St. Martin in the Caribbean Sea.

“Some strengthening is forecast during the next 24 hours and Chris could become a hurricane later today or early Thursday,” the center said.

Bloomberg