MARKET COMMENTARY | For Week Ending 8/10
Natural gas lands near five-week high on widening storage deficit.
Natural gas fluctuated between small gains and losses as weekend weather forecasts provided some fodder for both the bulls and the bears. By day’s end, the Sept-2018 NYMEX contract settled 0.7 cents higher at $2.860 per MMBtu. Crude oil gained 52 cents to $69.01 per barrel after an output report showed Saudi Arabian exports unexpectedly fell to 10.3 million barrels a day from 10.49 during June. Equity markets climbed higher as investors digested the day’s basket of quarterly earnings releases, which had so far shown strong growth.
Natural gas pushed 3.7 cents higher to $2.897 on reemerging deficit concerns as hotter temperatures in the Midwest and Northeast had the potential to counter milder temperatures in the South Central and limit deficit reduction. Crude inched 16 cents higher to $69.17 after the first set of U.S. economic sanctions were imposed on Iran, which potentially set the stage for additional sanctions on their oil exports in November. Stocks traded in positive territory as investors brushed aside trade tensions between the U.S. and China and focused on corporate earnings reports.
Natural gas extended its rally to a 5-week high ahead of Thursday’s storage report, which was expected to show a build in the mid-40s. The cost of gas jumped 5.2 cents higher to $2.949. Crude oil plunged $2.23 lower to $66.94 after the EIA reported a smaller-than-expected 1.4-Millionbarrel decline in crude inventories. Equities lost ground with downside pressure coming from slumping energy and utility shares and on uncertainty over trade tariffs with China.
Natural gas gained 0.6 cents to settle at $2.955 after the EIA reported a 46 Bcf injection, which came in mostly in line with market expectations. Crude oil dipped 13 cents to $66.81 after Wednesday’s steep drop that was inspired by a lower-than-expected drop in oil inventories and concerns the U.S-China trade spat could threaten demand. Equity markets moved lower as investors digested a basket of solid earnings and escalating trade tensions with China.
Natural gas gave back 1.1 cents to end the week at $2.944 as traders locked in profits following the week’s rise. Crude oil closed 82 cents higher at $67.63 after the International Energy Agency raised its forecast for global oil demand growth for 2019. Equities plummeted as a steep slide in the Turkish lira rippled across global markets.
Natural gas traders will continue to pay close attention to the weather forecast for signs of increased cooling demand, especially with the stubbornly high storage deficit.