The hurricane season is in full swing in the US, and barely two months after hurricane Laura ploughed into the Gulf Coast, Hurricane Delta is on the prowl, prompting the shut down of oil wells in the Gulf of Mexico. Subsequently, the price of natural gas has spiked more than 5% this Wednesday, sending it to near 2-month highs.
Hurricane Delta is expected to pick up strength as it nears possible landfall on Friday, and natural gas supplies have been disrupted as a consequence. Natural gas is trading at 2.905, for a gain of 9.25% this week as at the time of writing.
Natural gas is trading at its highest levels in 2020, after hitting lows of 1.529 in June 2020. The price action is now challenging the resistance formed by the previous highs of 18 March and 19 November 2019, as well as 5 October 2020 highs. A breakout above this level opens the door towards the 11 June 2018/21 September 2020 highs at 3.017, with 3.154 (29 January 2018 and 21 January 2019 highs) and 3.310 (13 November 2017 and 22 October 2018 highs) forming the immediate potential upside targets beyond this point.
Suppose there is little or no damage from the hurricane to facilities and supply of natural gas from the Gulf Coast is restored as early as next week. In that case, we could see prices cooling off towards 2.610 (18 February 2019 and 31 August 2020 lows), with 2.485 and 2.325 lining up as potential downside targets.
