Weekly Energy Market Watch | April 23, 2018

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

MARKET COMMENTARY | For Week Ending 4/20
Natural gas recovers late-week following a rare April storage draw.

Natural gas climbed 1.7 cents to $2.752 per MMBtu as cooler temperatures were forecast for the Midwest and East through the end of the month. Crude oil retreated $1.17 to settle at $66.22 per barrel as traders removed some of the geopolitical risk premium associated with the prior week’s 8.6% jump. Equity markets jumped higher on better-than-expected retail sales data and as investors began to shift their attention to corporate earnings season.

Natural gas gave back much of the prior session’s gains as updates to the weekend weather forecast showed milder temperatures moving into a large part of the country late-month, which would likely reduce demand. The May-2018 NYMEX contract closed 1.4 cents lower at $2.738. Crude edged 30 cents higher to $66.52 as traders weighed elevated geopolitical risks in the Middle East against global supplies. Stocks continued to move higher investors cheered another batch of upbeat corporate earnings reports and a round of positive economic data.

Natural gas finished the day 0.1 cents higher at $2.739 as traders positioned ahead of Thursday’s storage report, which was expected to show a draw in the 23 Bcf range. Crude soared $1.95 to $68.47, a fresh three-year high, after the EIA reported a 1.1-Million-barrel decrease in oil inventories, a 3.0 Mb decrease in gasoline stocks, and a 3.1 Mb drop in distillates. Equities landed in the red as investors continued to focus on corporate earnings releases.

Natural gas fell 7.9 cents to $2.660 even after the EIA revealed a larger-than-expected 36 Bcf withdrawal from storage, which put total working gas in storage at 1,299 Bcf. Crude dipped 18 cents to $68.29 ahead of Friday’s meeting between OPEC members, where they were likely to renew their commitment on curbing oil exports. Stocks pulled back from recent gains even though corporate earnings reports had mostly come in higher-than-expected.

Natural gas rebounded 7.9 cents to $2.660 as traders focused on the widening storage deficit, which could stretch to as much as 500 Bcf the following week. Crude held steady, dipping 3 cents to $68.26, as traders monitored OPEC’s production meeting. Equity markets ended the week on a sour note, with downside pressure coming from the energy and technology sectors.

Investors and crude traders will get an initial look at first quarter GDP late-week. Natural gas traders will attempt to balance rising production with a widening storage deficit.

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