Henry Hub

A particularly hot summer in much of the US has boosted natural gas prices somewhat, as the FT reports, with spot prices soaring in some areas and gas futures rising 19 per cent since May.

But will it do much to address the structural changes going on in the US gas market?

Barclays Capital’s gas analysts last week said they would remain relatively bearish on 2011 gas prices despite the recent upswing, are now worrying about the impact of Gulf of Mexico hurricane season, too. Both the incidence of hurricanes and their effect on gas production are difficult to predict, they wrote:

Last year provided a good example of how changing climate conditions can alter the prospects for hurricane activity in the Atlantic. 2009 was marked by an El Nino event, a condition whereby the temperatures of the Equatorial Pacific Ocean are warmer than historical norms, which was unforeseen at the beginning of the summer. El Nino conditions tend to suppress hurricane activity in the Atlantic. Forecasters had expected a more active hurricane season for 2009, but
the development of El Nino conditions later in the year resulted in the quietest season since
1997.

They also point out that hurricane seasons can destroy gas demand, by heralding wetter, rainier summers.