Weekly Energy Market Watch | June 11, 2018

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

MARKET COMMENTARY | For Week Ending 6/8
Natural gas retreats as temperatures moderate in the Northeast.

Natural gas slid 3.2 cents to $2.930 per MMBtu as a dip in the jet stream would allow cooler air to infiltrate the Northeast during the week, which would reduce cooling demand in the region. Crude oil fell $1.06 to end the day at $64.75 per barrel on uncertainty over when OPEC and Russia would begin increasing oil exports. Equity markets jumped higher to start the week as traders shrugged off trade war concerns and continued to focus on the prior Friday’s solid jobs report.

Natural gas drifted toward downside support around last week’s lows as traders focused on the week’s cool down in the major consuming Northeast region. The July-2018 NYMEX contract closed 4.0 cents lower at $2.890. Crude prices rebounded 77 cents to $65.52 as traders looked to cover short positions after the commodity shed 9.9% over the last week and a half. Stocks traded in a mixed fashion even after China offered to purchase $70 billion of U.S. agricultural and energy products to fend off U.S. trade tariffs.

Natural gas rebounded 0.6 cents to $2.896 as traders positioned ahead of the following day’s storage report, which was expected to show a build around 90 Bcf. Crude oil retreated 79 cents to $64.73 after the EIA revealed a 2.1-Million-barrel increase in domestic oil inventories, a 4.6 Mb climb in gasoline stocks, and a 2.2 Mb bump in distillates. Equities soared higher as a tech rally continued to drive the Nasdaq into record territory and as rising government bond yields lifted financial shares.

Natural gas stretched 3.4 cents higher to $2.930 after the EIA reported a 92 Bcf injection into storage, which was mostly in line with expectations. However, the figure was below historic norms and widened the deficit to the 5-year average to 512 Bcf. Crude rebounded $1.22 to $65.95 after several European companies announced plans to withdraw from their businesses in Iran due to the pending U.S. sanctions. Equities managed to land in the green with support coming from rising financial shares.

Natural gas lost 4.0 cents to end the week at $2.890 as an expected cool down in temperatures weakened demand expectations over the weekend. Crude dipped 21 cents lower to settle at $65.74 as traders monitored comments from Saudi Arabia and Russia over future output. Equity markets pushed higher with help from shares across consumer staples.

Equity and crude oil market participants will have a heavy week of geopolitical and economic news to digest. Natural gas traders will continue to focus intently on the weekly storage report.

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