Recent weeks have seen a surge in natural gas prices, largely due to the impact of Hurricane Helena on the U.S. East Coast. The storm has caused widespread devastation, leading to 93 fatalities and leaving millions without power. President Biden has declared a state of emergency in response to the crisis.
As a result of the turmoil, Henry Hub natural gas prices are on the rise, approaching the critical $3 per MMBtu threshold. This upward momentum is being fueled by lower-than-average supply additions, a factor that could continue to drive prices higher in the coming months.
Impact of Hurricane Helena on Natural Gas Production
The Atlantic hurricane season is known for adding volatility to natural gas markets, and this year is no different. Helena has already disrupted nearly 20% of natural gas production in the Gulf of Mexico, leading to a 30% price increase in September alone.
With production severely impacted, the market is anticipating further price gains as the storm’s effects linger. In addition to weather-related disruptions, supply-and-demand dynamics are also contributing to upward pressure on prices. With natural gas storage levels falling below average and strong demand fueled by warm temperatures and economic growth, the stage is set for prices to surpass the $3 per MMBtu mark.
Forecasts for Medium- and Long-Term Gas Prices
The Energy Information Administration (EIA) projects that natural gas prices will continue to climb in the months ahead. Forecasts indicate an average price of $2.52 per MMBtu in Q4, rising to $3.01 per MMBtu in Q1 2025. Peak pricing is expected toward the end of next year, with an average price of $3.36 per MMBtu.
The growth of LNG exports, coupled with stable domestic supply, will be the primary drivers of this trend. Additionally, the ongoing hurricane season poses a risk of further production disruptions that could amplify price increases.
Key Resistance Levels for Henry Hub Contracts
As Henry Hub prices continue to climb, investors are keeping a close eye on key resistance levels. The $3.10 per MMBtu barrier, established by June lows, presents the first major challenge for buyers. If prices break through this level, the next target is set at $3.40 per MMBtu, representing historical highs.
On the downside, support levels at $2.65 and $2.45 per MMBtu could serve as bounce points in the event of corrective pullbacks.
Disclaimer: This article is intended for informational purposes only and does not constitute investment advice. Investors should carefully evaluate all risks before making any investment decisions.