Tropical Storm Isaac is heading for the U.S. Gulf coast, and it’s sent natural gas futures soaring as traders and investors anticipate a serious disruption of energy production and supply.
Natural gas for September rose 1.8 percent to $2.826 per million British thermal units on the New York Mercantile.
Past Isaac, there’s another tropical formation brewing over the Atlantic. Hurricane season typically peaks between mid-August to mid-October.
According to the National Hurricane Center, Isaac currently shows maximum sustained winds of 45 miles per hour, and is around 95 miles east of Guadeloupe. It is set to hit the western part of Florida’s coastline on Monday morning. Isaac is scheduled to develop into a full hurricane within 48 hours.
Although the U.S. now collects less gas from the Gulf than it did in the past, the development underscores how seriously investors take these hurricanes and their possible effect on the supply chain.
Back in 2005, the nation received around 15 percent of total U.S. output, or roughly 10.1 billion cubic feet of gas, from the Gulf. Today, that’s down to just 4.3 billion cubic feet, or 5.2 percent of total output.
Natural gas has had an uphill struggle trying to go beyond $3 per MMBtu in recent times, and this is largely because U.S. gas inventories are currently quite a bit above their normal levels in the past due to the shale boom.
