Natural-gas futures prices rose 1% Thursday, settling at the highest level in a week, as traders again cast a nervous eye to a storm in the Gulf of Mexico.
Tropical Storm Nate, in Mexico's Bay of Campeche, could grow into a hurricane on Friday or Saturday, the National Hurricane Center said. The growing storm, south of the Texas Gulf Coast, caused BP to evacuate nonessential personnel from three production platforms in the gulf. Other producers said they are monitoring the storm.
Those moves come as some production still remains shut in from Tropical Storm Lee, which hit the region last weekend.
The Bureau of Ocean Energy Management, Regulation and Enforcement said Thursday that 6.8% of gulf natural gas output, or 362.8 billion cubic feet of gas, remained shut in. That's a sharp reduction from the 41.6% of output offline on Tuesday and 18.1% on Wednesday. The gulf accounts for about 7% of U.S. natural gas output.
Gas for October delivery on the New York Mercantile Exchange settled 4 cents higher at $3.98 per million British thermal units, after moving in a range of $3.92 to $4.029/mmBtu. The settlement price was the highest since Sept. 1, when Tropical Storm Lee held the market's interest.
The U.S. Energy Information Administration reported 64 billion cubic feet of gas was added to storage in the week ended Sept. 2, in line with forecasts. Traders said the outages from Lee could result in lower injections into storage next week, but may not be significant enough to push prices higher, now that the peak summer cooling demand period has passed.
Kyle Cooper, managing partner at IAF Advisors in Houston, said the market quickly put the storage data behind it to focus on the latest storm in an active season.
"There is still a lot of uncertainty about Nate," he said, adding that storm and any that follow will continue to spark price swings near the $4 area where prices have centered since the start of August.
"I think we may bounce around 10 to 15 cents on either side of $4 until we get hurricane season behind us," he said. The peak of the season, which runs through November, is mid-September.