Weekly Energy Market Watch | May 21, 2018

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

MARKET COMMENTARY | For Week Ending 5/18
Natural gas inches higher with storage replenishment in focus.

MONDAY 5/14
Natural gas moved 3.6 cents higher to $2.842 per MMBtu as broad-based above-normal temperature trends spurred some buying interest. Meteorologists called for above normal temperatures to cover much of the country in the next 6-10-day period. Crude oil advanced 26 cents to $70.96 per barrel after OPEC increased their demand outlook for the year and trimmed their production forecast. Equity markets climbed higher ahead of a planned meeting later in the week between the U.S. and China regarding trade and tariffs.

TUESDAY 5/15
Natural gas dipped 0.6 cents to settle at $2.836 as early expectations for the week’s storage report called for a build in the triple-digits. The June- 2018 WTI crude contract gained 35 cents to $71.31 as traders positioned ahead of the following day’s weekly inventory report. Equities sank lower following a round of corporate earnings misses and on concerns rising bond yields could make stocks less attractive.

WEDNESDAY 5/16
The June-2018 NYMEX natural gas contract closed 2.1 cents lower at $2.815 as traders awaited the following day’s storage report to gain fresh insight into the pace of storage injections. Crude oil managed to eke out an 18-cent gain to settle at $71.49 after the EIA reported a 1.4-Million barrel decrease in oil inventories, a 3.8 Mb decline in gasoline stocks, and a 0.1 Mb dip in distillates. Stocks staged a tepid comeback on the day, while investors kept an eye on North Korean developments and rising bond yields.

THURSDAY 5/17
Natural gas climbed 4.4 cents higher to $2.859 even after the EIA reported a slightly larger-than-expected 106 Bcf build in storage. Although the injection narrowed the deficit to 501 Bcf, the initial refill rate this season has only been moderately higher than the five-year average. Crude oil was unchanged even after several European countries halted further investment in Iran due to impending U.S. sanctions, which raised concerns Iranian production would be curbed. Equity markets lost ground late in the session as rising bond yields continued to concern investors.

FRIDAY 5/18
Natural gas slid 1.2 cents lower to close out the week at $2.847 as traders eventually reacted to the prior day’s seemingly bearish storage report. Crude oil shed 21 cents to settle at $71.28 after a meeting between OPEC and Russia, where leaders expressed concerns over prices potentially rising too high. Stocks struggled to find direction as investors gained little clarity on the trade talks between the U.S. and China.

LOOKING AHEAD
Weather forecasts for above-normal temperatures could offer some support to natural gas prices as cooling demand begins to pick up.

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