The NYMEX September natural gas futures contract started to lose ground Friday on potentially lower demand as a result of Tropical Storm Isaac, sources said. As of 1:18 p.m. EDT (1718 GMT), it was trading at $2.732/MMBtu, down 7 cents compared with Thursday's close.
September remains in a rangebound mood, "with cooler weather capping the upside, while the front of the curve is building in some hurricane season premium," Barclays Capital analysts said in a research note.
Yet, according to IAF Advisors director Kyle Cooper, the effect of Tropical Storm Isaac's track is "most likely net bearish," because it takes more demand than supply away. This is due to lower temperatures as a result of the storm, and suspended industrial operations along the Gulf Coast of Mexico, he said.
The Gulf Coast has "much more demand and much less supply than years ago," Copper added.
Tropical Storm Isaac Friday morning was located about 175 miles (280 km) south-southwest of Santo Domingo, Dominican Republic, the US National Hurricane Center said in its latest update on the storm. It is expected to pass through Haiti and Cuba on Sunday, and its center is expected to pass south of Florida around 8 a.m. EDT on Monday, according to NHC.
The contract has traded so far Friday in a range between $2.724/MMBtu and $2.877/MMBtu.
