Six million people and businesses were left in the dark from South Carolina to Maine following Hurricane Irene’s path of destruction. The race to restore power has begun by thousands of utility workers to repair ripped down power lines and crushed critical equipment near power plants. According to the Dow Jones Newswires, more than three million people were still without power as of Monday afternoon. It could take weeks to totally restore power to all areas affected.
As a result, natural gas futures on Monday reached their lowest levels since early March as power outages and forecasted moderate weather in many regions slashed demand. Bentek Energy said in a research note that the storm has so far reduced demand for natural gas along the East Coast by about 2.8 billion cubic feet.
Natural gas for September delivery settled 7.4 cents, or 1.9%, lower, at $3.857 a million British thermal units on the New York Mercantile Exchange. The September contract expired upon settlement.
Natural gas for October delivery, meanwhile, settled 8.2 cents, or 2.1%, lower at $3.83/MMBtu. The October contract traded at a volume nearly 10 times higher than the September contract.
Both contracts touched intraday lows not seen in nearly six months with September futures dipping as low as $3.834/MMBtu and October’s falling to $3.822/MMBtu.
Though Texas continues to be plagued with temperatures exceeding 100 degree Fahrenheit and above-normal heat is forecast for parts of the Midwest in coming days, market participants are beginning to dial down their expectations that this summer’s unseasonably hot temperatures will continue to buoy prices as they have all summer, said Rich Ilczyszyn, senior market strategist at MF Global.
“The market’s in a real bearish position,” Ilczyszyn said. “It’s probably another month before we start talking about cold weather and another 60 to 90 days before we start seeing it.”
Indeed, the Commodity Futures Trading Commission reported Friday large noncommercial traders raised their net-short position on the New York Mercantile Exchange by about 1% during the week ended Tuesday. An increase in short positions means more traders are betting prices will fall than are putting money on prices to rise.
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