MARKET COMMENTARY | For Week Ending 11/9
Winter natural gas futures race higher ahead of the season’s first cold shot.
The Dec-2018 NYMEX natural gas contract rocketed 28.3 cents higher to $3.567 per MMBtu as weekend weather forecasts called for a cold shot to descend into the eastern half of the nation the following week, boosting heating demand and trimming remaining storage injections. Crude oil inched 4 cents lower to $63.10 per barrel even as Iranian economic sanctions went into effect and were likely to reduce oil exports. Equity markets managed to land in positive territory as rising bank and energy shares offset losses in the tech sector.
Natural gas consolidated after Monday’s massive jump in the near-term winter months and the prompt-month gas contract dipped 1.2 cents to $3.555. Crude oil fell 89 cents to $62.21 after President Trump said he wanted to move a little bit slower on sanctions to keep prices subdued and ease worries about global supplies. Equities climbed higher ahead of the midterm election as investors considered how the outcome might impact the economy.
Natural gas was unchanged as traders locked in profits ahead of Thursday’s storage report, which was expected to show a build in the upper-50s. Crude lost ground for the eighth day in a row after the EIA revealed a 5.8-Million-barrel increase in oil inventories. By day’s end, the Dec2018 WTI contract closed 54 cents lower at $61.67. Stocks soared higher after the midterm election yielded no major surprises, with the Democrats taking control of the House and the Republicans retaining the Senate.
Natural gas settled 1.2 cents lower at $3.543 after the EIA reported a higher-than-expected 65 Bcf build to storage, which put total working gas in storage at 3,208 Bcf. Crude oil officially entered bear market territory, dropping 20% from its recent high, on concerns global supply would outpace demand. Oil prices eventually finished the day $1.00 lower at $60.67. Equities traded in a mixed fashion as investors looked to gain insight into the Fed’s economic outlook later in the day.
Natural gas jumped another 17.6 cents to $3.719 ahead of the following week’s cold shot, where temperatures were expected to be 10-20 degrees below normal for much of the eastern half of the nation. Crude edged 48 cents lower to $60.19, the tenth consecutive down day and the longest losing streak in three decades, as oversupply concerns rapidly returned to the market. Stocks fell to end the week after a read on producer inflation came in hotter-than-expected.
Natural gas prices are likely to remain elevated as traders closely monitor the severity of this week’s cold shot and how it will influence upcoming storage reports.