Hurricane Opal's Shift in Course Causes Market Turmoil in Natural Gas, Refined Petroleum, and Crude Prices

Hurricane Opal's unexpected shift in course from the Louisiana-Texas Gulf Coast to Florida led to significant fluctuations in the futures prices of natural gas, refined petroleum, and crude petroleum on October 3, 1995. As the storm's trajectory changed, fears of natural gas supply shortages caused short-term prices to rise, but ultimately, gas futures prices fell by $.085 MMBtu to $1.809 MMBtu in November. Meanwhile, crude petroleum futures prices dropped by $.08 bbl to $17.56 bbl, and gasoline futures prices fell by 0.85 cents to $1.93 cents/gallon. The market's response to the shifting hurricane trajectory was influenced by the curtailment of approximately 637,000 b/d of crude output in the U.S. Gulf, according to the Minerals Management Service (MMS).

Key Takeaways:

• The shift in Hurricane Opal's course from the Louisiana-Texas Gulf Coast to Florida on October 3, 1995, led to a decrease in futures prices for natural gas, refined petroleum, and crude petroleum.
• Natural gas futures prices fell by $.085 MMBtu to $1.809 MMBtu in November 1995, while crude petroleum futures prices dropped by $.08 bbl to $17.56 bbl.
• Gasoline futures prices decreased by 0.85 cents to $1.93 cents/gallon, and cash gasoline prices in the Gulf Coast rose by 0.25-0.4 cents in morning trading.
• The curtailment of approximately 637,000 b/d of crude output in the U.S. Gulf, as reported by the Minerals Management Service (MMS), affected the market's response to the shifting hurricane trajectory.
• The storm's trajectory was expected to impact crude stocks, with some predicting a build due to the current trans-Atlantic arbitrage and refinery maintenance in the United States.
• Sarah A. Emerson, director of Energy Security Analysis Inc., noted that a lot of crude would have to go to the Midcontinent markets before the market moves into contango.

Statistics:

• Natural gas futures prices fell by $.085 MMBtu to $1.809 MMBtu in November 1995.
• Crude petroleum futures prices dropped by $.08 bbl to $17.56 bbl on the New York Mercantile Exchange (Nymex).
• Gasoline futures prices decreased by 0.85 cents to $1.93 cents/gallon on Nymex.
• Approximately 637,000 b/d of crude output was curtailed in the U.S. Gulf, according to the Minerals Management Service (MMS).
• Around 53% (6.85 Bcfd) of total U.S. Gulf Coast natural gas production was curtailed ahead of the storm.

Sources:

• Energy Security Analysis Inc.
• Minerals Management Service (MMS)
• New York Mercantile Exchange (Nymex)