Weekly Energy Market Watch | February 19, 2018

Jonathan Lee

MARKET COMMENTARY | For Week Ending 2/16
Bearish weather forecast weighs on natural gas demand outlook.

Natural gas closed 3.2 cents lower at $2.552 per MMBtu, its lowest level of the winter, as the weather forecast remained unsupportive of increased heating demand in the major consuming eastern regions of the country. Equity markets rebounded after the previous week’s rout as investors digested the details of President Trump’s newly released $200 billion infrastructure plan. Crude oil tracked higher with equity markets after experiencing a 9.5% drop the prior week, the steepest weekly decline since January 2016. By day’s end, the commodity gained 9 cents to settle at $59.29 per barrel.

Natural gas put an end to its four-day skid as traders positioned ahead of the week’s storage report, which was expected to show a draw in the 180 Bcf range and widen the deficit. The March 2018 NYMEX contract edged 4.2 cents higher to $2.594. Crude dipped 10 cents lower to $59.19 after the International Energy Agency said non-OPEC crude production, primarily from the U.S., would likely outpace demand in 2018. Equities inched higher as investors looked ahead to the following day’s inflation data.

Natural gas held steady ahead of Thursday’s storage report and the cost of gas finished the session 0.7 cents lower at $2.587. Crude oil jumped $1.41 to $60.60 even after the Energy Information Administration (EIA) reported a 1.8 Mb increase in domestic oil inventories, the third increase in a row. Equity markets continued to climb higher as investors shook off inflation concerns after the consumer price index advanced 0.5% in January.

Natural gas slipped 0.7 cents lower to $2.580 even after the EIA reported a larger-than-expected 194 Bcf draw from storage, which put total working gas at 1,884 Bcf. Crude settled 74 cents higher at $61.34 even though weekly inventory data showed U.S. production climbed above 10 Mb per day, the highest level since 1970. Better-than-expected manufacturing data in the New York and Philadelphia regions helped equities advance during the session.

Natural gas closed 2.2 cents lower at $2.558 as the weather forecast limited demand expectations for the eastern half of the country through the end of the month. Oil prices gained 34 cents to $61.68 after a Saudi Arabian official offered continued support for production cuts. Equity markets posted their sixth consecutive day of gains on continued signs of economic growth.

Natural gas traders will maintain their focus on the weather forecast for any signs of colder temperatures moving into the eastern half of the country.

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