Weekly Energy Market Watch | September 17, 2018

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

MARKET COMMENTARY | For Week Ending 9/14
Natural gas slides late-week as Hurricane Florence makes landfall.

Natural gas gained 2.8 cents to close at $2.804 per MMBtu as traders covered short positions even as power sector demand was expected to decline during the week with remnants from Tropical Storm Gordon pushing through the Midwest and East. Crude oil edged 21 cents lower to $67.54 as traders awaited fresh supply data released from OPEC and the EIA later in the week. Equity markets fluctuated between small gains and losses as investors continued to focus on trade tensions with no new economic reports released on the day.

The October-2018 NYMEX natural gas contract climbed another 2.4 cents to $2.828 as the market continued to consolidate ahead of the week’s storage report. Crude bounced $1.71 higher to $69.25 on fears over Libya’s oil output after gunmen attacked the state-run oil company headquarters, killing two people. Equities landed in the green after the Bureau of Labor Statistics revealed job openings jumped 1.7% during July.

Natural gas inched 0.1 cents higher to $2.829 ahead of the following day’s storage report, which was expected to show a build in the low 70’s and would compare to the 5-year average build of 74 Bcf. The October-2018 WTI crude oil contract settled $1.12 higher at $70.37 after the EIA reported a 5.3-Million-barrel decline in oil inventories. Stocks traded in a mixed fashion as investors digested the latest trade talks and fresh wholesale inflation data.

Natural gas slipped 1.2 cents lower to $2.817 even after the EIA reported a slightly smaller-than-expected 69 Bcf injection, which put working gas in storage at 2,636 Bcf. Oil prices plunged $1.78 lower to $68.59 after OPEC revealed production rose by 420,000 barrels a day last month, the highest increase in more than two years. Equity markets traded in positive territory on hopes Treasury Secretary Steven Mnuchin’s invitation to Chinese officials for further trade talks would ease tensions.

Natural gas fell 5.0 cents to $2.767 as Hurricane Florence made landfall, caused widespread power outages in the Carolinas, and was expected to bring heavy rains to much of the East over the next week. Crude closed 40 cents higher at $68.99 after the International Energy Agency painted a rosier global demand outlook for 2018 and 2019, upping estimates by 100,000 barrels a day. Equities were marginally changed even on reports President Trump instructed aides to move forward with the $200 billion in Chinese tariffs.

Natural gas traders will closely monitor conditions in the wake of Hurricane Florence to gauge upcoming demand.

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