MARKET COMMENTARY | For Week Ending 12/9
Frigid winter temperatures propel natural gas prices higher.
Natural gas rocketed 21.8 cents higher to $3.654 per MMBtu as a large swath of Arctic air was expected to descend into the Lower 48 states and boost heating demand during the week. Crude oil traders looked to extend the OPEC production cut rally, which drove the commodity over 14% higher in three days. By day’s end, oil managed to eke out an 11-cent gain to settle at $51.79 per barrel. Equity markets marched higher to start the week with support coming from rising financial shares.
Natural gas began to face some headwinds as traders contemplated whether power sector demand would begin to slow at the fuel’s current price point. As a result, prices slid 1.9 cents lower to $3.635. Crude oil took a breather after climbing to a one-year high. Oversupply concerns drove prices 86 cents lower to $50.93 after it was learned stockpiles at Cushing, Okla. grew by 3 Mb the prior week and OPEC pumped another record high amount during November. Equity markets drifted between positive and negative territory as investors digested the day’s basket of economic reports.
Updated weather forecasts showed a higher confidence for below normal temperatures for much of the northern U.S. during the next two weeks, which would help elevate heating demand for natural gas. Even so, prices declined 3.2 cents to $3.603. The Energy Information Administration (EIA) revealed a larger-than-expected 2.4 Mb drop in domestic oil inventories. However, oil prices fell $1.16 to $49.77. The postelection rally continued to propel equity markets into record territory as many investors remained optimistic the Trump administration would enact pro-business policies.
Natural gas rebounded 9.2 cents to $3.695 after the EIA documented a 42 Bcf withdrawal from storage. The figure was mostly in line with market expectations. Crude oil gained $1.07 to $50.84 as traders remained focused on the upcoming meeting between OPEC and nonOPEC producers. Equity markets were marginally higher after posting their largest one-day gain since the election during the previous session.
Natural gas moved 5.1 cents higher to $3.746 as frigid temperatures were expected to boost heating demand the following week. Crude oil edged 66 cents higher to $51.50 as traders grew more optimistic OPEC officials could convince non-OPEC producers, like Russia, to commit to production cuts in their meeting over the weekend. Equity markets once again marched deeper into the record books as investors proved they were very eager to buy stocks.
Market participants will pay close attention to the outcome of the Federal Reserve’s two-day monetary policy meeting.