Velocityshares 3X Inverse Natural Gas Etn (DGAZ)

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Henry Hub decrease in days following Hurricane Harvey

In the days following Hurricane Harvey’s landfall on the Texas Gulf Coast as a Category 4 storm on Friday, Aug. 25, 2017, prices at the Henry Hub in Louisiana—generally considered the U.S. price—actually decreased.
As more volumes of natural gas are produced from onshore shale resources typically outside hurricane-prone zones, natural gas production that is disrupted because of hurricanes is lower, and the impact on the U.S. natural gas market is less severe. From Aug. 24–Sept. 4, 2017, the Bureau of Safety and Environmental Enforcement within the Department of the Interior reported that GOM shut-ins, or reduced production of offshore natural gas, averaged 544 MMcfd, reaching a maximum of 835 MMcfd on Aug. 26.

Average Texas Gulf Coast onshore production between Aug. 25 and Sept. 2, 2017, including production from the Eagle Ford, was 80% lower than in the week prior to Hurricane Harvey making landfall based on limited sample data from S&P Global Platts's Southeast Gulf/Texas Observer. Production returned to typical levels by Sept. 6.

Regional demand for natural gas decreases with power outages and lower temperatures. By the time Hurricane Harvey made landfall, lower-than-average temperatures had already pushed electric loads below typical levels in the region. In the days following the storm, a combination of outages and decreasing temperatures caused hourly loads to decrease below the previous five-year lows in Texas’s most affected Coast, South Central, South, and North Central Weather Zones. In the ERCOT Coast Weather Zone—where Houston is located and where the hurricane affected the most people—loads decreased by as much as half on days following the hurricane. As Hurricane Harvey made landfall, natural gas consumption for electric power generation in Texas decreased below 2011–15 lows. Natural gas consumption for power generation has continued to decrease even with power restorations as temperatures have remained lower than seasonal averages.
U.S. exports of natural gas were disrupted by Hurricane Harvey. On Aug. 28, 2017, the U.S. Coast Guard closed several regional ports because of the storm. For days after, no liquefied natural gas (LNG) tankers departed from the Sabine Pass in Louisiana. On Sept. 6, one vessel with a carrying capacity of 3.8 Bcf was being loaded, while six other vessels were near the port waiting for a loading window.

Pipeline flows from Texas to Mexico decreased more than 60% compared to the prior week on the day Hurricane Harvey made landfall according to S&P Global Platts. At least part of this decrease was because two compressor stations shut down on the Tennessee Gas line in South Texas as employees were evacuated according to Bloomberg. As of Sept. 11, pipeline flows had returned to pre-hurricane levels.






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