Natural Gas ETFs Jump on Rising LNG Exports, Potential Hurricane Disruptions

Natural gas futures and related exchange traded funds surged Monday on rising liquefied natural gas exports and on supply concerns as another hurricane threatens production off the Gulf of Mexico.

The United States Natural Gas Fund (NYSEArca: UNG) increased 6.7% Monday as Nymex natural gas futures advanced 8.8% to $2.65 per million British thermal units.

Tropical Storm Delta is projected to strengthen into a hurricane before hitting the Gulf Coast between Louisiana and Florida on Friday, Reuters reports.

The threat of another major storm moving toward the Gulf Coast comes as Sempra Energy’s Cameron LNG terminal, which has seen activity disrupted since Hurricane Laura knocked out power in the region in late August, is showing signs of normalizing, the Natural Gas Intelligence reports.

“Price action this week could be tricky, with lots of moving parts,” according to Bespoke Weather Services. “The supply/demand balance is tight, but it has to be in order to avoid containment, at least in the salts.”

Looking ahead, Bespoke predicted only small adjustments to its weather outlook, with lower demand for the next two weeks.

“We continue to project a very tame weather pattern for the month of October as a whole,” Bespoke said.

Despite the rise in the futures market, spot gas prices for natural gas remain near their lowest in years in several regions of the United States and Canada after a mild summer cooling season and the coronavirus-induced demand destruction for heating and industrials.

However, some traders are raising bets on natural gas, with net long positions on the New York Mercantile and Intercontinental Exchanges rising last week for a second week in three, on a rebound in energy demand as the economy picks up once state governments lift coronavirus-linked lockdowns and another stimulus package adds to the growth outlook.

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