- Energy traders are betting that Hurricane Milton will spark power outages in Florida.
- US natural gas futures have fallen 8% in the last three days.
- Traders, though, have ramped up long positions on natural gas in recent weeks amid rising prices
Energy traders are on high alert for Hurricane Milton and are ramping up bets that the weather event is about to knock out electricity in Florida and surrounding states, leaving power plants idling as demand evaporates.
Front-month US natural gas futures have dropped 8% over the last three days, from $2.97 to $2.74 per million British thermal units as of Tuesday morning. It's a sign markets are anticipating a disruption to power plants that could send prices tumbling, despite low gas storage in recent months.
The price drop comes as the Southeast prepares for Hurricane Milton, which is expected to hit Florida by Wednesday evening. The storm, which was classified as a Category 5 hurricane, is expected to bring severe damage to Florida and the surrounding states just weeks after the destructive Hurricane Helene brought high winds and flooding to the region.
Energy traders have leaned more bullish on natural gas in recent weeks before the latest bout of extreme weather. Gas futures have jumped 41% over the last six weeks, partly fueled by record-low natural gas inventories for the last three months, according to government data on gas storage dating back for the last 27 years.
Long bets on natural gas, meanwhile, have climbed to their highest level since June on the New York Mercantile and Intercontinental Exchanges, Reuters reported.