Before we get to the natural gas story, the cold front is now moving through the city with north winds 10-20 mph. It is deceiving as the temperatures are dropping into the 80s, but the humidity is rising with dewpoints in the mid to upper 70s! The front will stall to our south with the high humidity in place over our area. This sets us up for a potential heavy rain event tonight and/or Wednesday night. Right now it looks like Wednesday night has the best chance for the heavy rain. Watch tonight at 5, 6 & 10 on NBC Action News and Gary will have more details on this end to the heat wave.
Now to the crazy energy markets.
Energy prices have been on a down trend the last few weeks, along with natural gas. Two weather phenomena can make natural gas rise during the summer. 1. An extended period of heat for the Midwest and New England. 2. A hurricane in the Gulf of Mexico, especially anywhere from Galveston, TX to Lake Charles, LA.
There has been almost no big heat in the big energy usage areas this summer, and little is in the forecast. Dolly, which became a category 2 hurricane, made landfall in Brownsville, TX 2 weeks ago. She was south of the main oil wells and had little effect. Eduoard made landfall Tuesday morning near Houston. This is a prime area, but he was just a tropical storm, so early Tuesday morning prices were still dropping.
However, a prominent hurrcane forecaster, Dr. William Gray, came out with an updated forecast for the hurricane season, saying the potential is there for 17 named storms, up from 15. This forecast caused panic in the natural gas market and even pulled crude up off its lows of the day.
The natural gas market has a "herd" mentality. Traders hear more storms, so they think the wells will be affected. This is just nuts! Even if there are more storms, it does not mean they will affect gas wells, or even be anything more than tropical storms.
If there are no storms the next 1-3 weeks that affect the northern Gulf of Mexico, you will likely see the prices drift back down. This, of course, assumes nothing else crazy happens.