The NYMEX July natural gas futures contract rallied on short covering and the increased potential that a tropical cyclone would form in the Gulf of Mexico. As of 10:50 am EDT the contract was trading at $2.645/MMBtu, up 6.3 cents from Thursday's close.
According to Price Futures Group senior market analyst Phil Flynn, prices were supported by a low-pressure system in the Gulf of Mexico that the the National Hurricane Center has given a 70% chance of developing into a tropical cyclone.
Flynn said the storm would have affected prices much more in prior years, but with the growth of shale gas production, the Gulf now accounts for only about 6% of US gas output.
"The impact is not what it used to be, but still, you've got to respect these storms, you just never know how much damage they'll do," he said.
Drew Wozniak, a vice president with ICAP Energy, said the price increase was likely the result of another "short cover Friday" ahead of the weekend. He put support at $2.503/MMBtu and resistance at $2.679/MMBtu.
The contract has been trading between $2.542/MMBtu and $2.647/MMBtu.
