Natural-gas futures prices were weaker Monday as Tropical Storm Nate avoided the U.S. Gulf oil and gas producing region.
With a potential supply disruption avoided, prices are falling under the weight of a well-supplied market in the fallow period between peak summer cooling demand and the winter heating season.
Gas for October delivery on the New York Mercantile Exchange was 1.6%, or 6.3 cents lower, at $3.852 per million British therma units. The contract traded in a range of $3.826 to $3.925 since Friday's settlement.
After topping $4 on an intraday basis last week as storm fears were brewing, gas may now be poised to test the $3.80 level, last seen in March, traders said.
Slackening demand from utilities for power to run air conditioners may set the stage for strong injections into storage, capping potential for a strong rebound in prices.
The U.S. Energy Information Administration said storage in the week ended Sept. 2 was 2% below its five-year average level, after a 64 billion cubic feet rise. The EIA projected storage could rise to 3.74 trillion cubic feet at the end of October, just 2.6% below the record high of 3.84 billion cubic feet in November 2010.
Jim Ritterbusch, president of Ritterbusch and Associates, said storage levels could post a surplus to five-year averages by the end of September, keeping pressure on prices.
The National Hurricane Center said Tropical Storm Nate made landfall in Mexico Sunday morning and headed inland, away from U.S. oil facilities. Tropical Storm Maria, meantime, was moving away from islands in the Northeastern Caribbean with little change in strength early Monday. Meantime, the government said 96% of Gulf gas output had been restored by Friday afternoon after shutdowns due to Tropical Storm Lee. At its peak in early September, about 55% of Gulf gas output was shut in due to Lee.