Weekly Energy Market Watch | March 19, 2018

Jonathan Lee

MARKET COMMENTARY | For Week Ending 3/16
Natural gas reverses course mid-week with storage report in focus.

Natural gas climbed 4.6 cents to $2.778 per MMBtu as traders looked to cover short positions. Additionally, meteorologists called for below normal temperatures to cover much of the western half of the nation, with above-normal temperatures in the eastern half. Crude oil fell 68 cents to $61.36 per barrel on concerns there were some cracks developing in OPEC’s united front on production cuts. Equity markets gave back some of the previous Friday’s solid gains with downside pressure coming from the industrial sector.

Natural gas inched another 0.8 cents higher to $2.786 on forecasts for another East Coast winter storm midweek, which would likely increase heating demand. Crude oil lost another 65 cents to $60.71 as global oversupply concerns moved to the forefront on fresh signs of rising U.S. output and emerging disagreements on OPEC’s production-cut policy. Equities slid late in the session even after the Consumer Price Index report showed inflation grew at a more modest pace than the month prior.

Natural gas retreated 5.5 cents to $2.731 as traders positioned ahead of the following day’s storage report, which was expected to show a draw around 90 Bcf. Crude managed to gain 25 cents to $60.96 as a sharp decline in refined products outweighed another build in oil supplies. The EIA reported a 5.0 Mb increase in oil inventories, but a 6.3 Mb drop in gasoline stocks and a 4.4 Mb decline in distillates. Stocks traded in negative territory after retail sales data came in well-below the market consensus and slipped for the third month in a row.

The cost of gas fell 5.0 cents to close at $2.681 even after the EIA reported a slightly higher-than-expected 93 Bcf draw from storage. Crude prices gained another 23 cents to $61.19 after the International Energy Agency forecast global demand to grow by 1.5 million barrels a day to 99.3 Mb per day during 2018. Equities rebounded after a report highlighting new jobless claims fell by 4,000 to 226,000 new claims.

Natural gas rebounded 0.7 cents to $2.688 as traders moved to the sidelines ahead of the weekend. Crude traders continued to positively react to the prior day’s IEA report, which forecast growth in global demand and petroleum prices jumped $1.15 to settle at $62.34. Equity markets climbed higher after the Federal Reserve Board of Governors reported industrial production grew 1.2% during February.

This week’s natural gas storage report is expected to come in slightly higher than the five-year average and widened the current storage deficit.

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