Weekly Energy Market Watch | November 19, 2018

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

MARKET COMMENTARY | For Week Ending 11/16
Frigid temperatures drive the largest daily natural gas swings in over 10 years.

MONDAY 11/12
The Dec-2018 NYMEX natural gas contract moved 6.9 cents higher to $3.788 per MMBtu as much of the eastern half of the nation braced for chilly temperatures during the week, which would lead to an early spike in heating demand. Crude oil edged 26 cents lower to $59.93 per barrel even after OPEC signaled a willingness to cut production amid concerns over swelling global supplies. Equity markets plummeted as worries over the health of the tech sector sparked a broad-market selloff.

Natural gas surpassed the $4.00 mark for the first time in four years as the early shot of cold temperatures had traders on edge, given the low supply of gas in storage. By day’s end, the cost of gas jumped 31.3 cents higher to $4.101. Crude lost ground for a record 12th consecutive session on continued fears over soaring global supply and weakening demand. The Dec-2018 WTI contract dove $4.24 lower to $55.69. Equities were mixed with support from rebounding tech shares, but with downside pressure from tumbling oil prices.

With frigid temperatures dramatically increasing heating demand into the following week, natural gas soared a massive 73.6 cents to close at $4.837, the largest single day price gain since January 30, 2007. Crude oil rebounded 56 cents higher to $56.25 after Tuesday’s 7.1% single-day drop as traders covered short positions and awaited Thursday’s inventory data. Stocks retreated amid concerns over some sliding tech giants that were close to entering bear market territory.

Natural gas gave back gains from the prior day’s overcooked rally after the EIA reported a 39 Bcf build, which put working gas in storage at 3,247 Bcf, the lowest level entering the winter heating season since 2003. The prompt month contract settled 79.9 cents lower at $4.038. Crude oil inched 21 cents higher to $56.46 even after the EIA revealed a large 10.3-Million-barrel increase in oil inventories. Stocks landed in the green following a solid read on October retail sales.

FRIDAY 11/16
Natural gas closed 23.4 cents higher at $4.272 ahead of the weekend as an uptick in volatility continued to lead to large daily swings. Crude fluctuated between small gains and losses before eventually settling unchanged during the session. Equity markets managed to recover early session losses following a positive read on the manufacturing sector.

Markets will be closed Thursday in observance of Thanksgiving Day. Volatility will likely continue as trading volume decreases during the holiday-shortened week.

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