Sentiment in natural gas remains poor
Natural gas prices have had a difficult time getting off the mat and have pushed down to multi-year lows in 2019. The first named hurricane briefly pushed prices higher, but record production continues to weigh on prices. During the next three months, prices will likely remain volatile as the official hurricane season is from July through to October.
Hurricanes affect production. When a hurricane makes its way through the Gulf of Mexico, drilling operations need to stop, as companies evacuate their employees from offshore drilling rigs. For example, as Hurricane Barry made its way through the Gulf, 70% of production was halted.
Sentiment remains negative. In fact, the US Department of Energy forecasts that natural gas spot prices for June, July, and August this year will average $2.37 per million British thermal units. If realized, this price would be the lowest summer average of natural gas price since 1998. So while the trend is negative, there are situations that could occur where prices surge higher if supply is disrupted. The trend that will likely continue is rising volatility.