MARKET COMMENTARY | For Week Ending 7/19
Natural gas declines as traders look beyond record-setting heat wave.
The August-2019 NYMEX natural gas contract lost 4.5 cents to close at $2.408 per MMBtu as weekend weather forecasts showed mostly normal temperatures returning to the Midwest and Northeast in the coming 8-10-day period, reducing demand prospects. Crude oil settled 63 cents lower at $59.58 due in part to stout upside technical resistance and the return of production in the Gulf, which was cut by 73% due to Hurricane Barry. Equity markets landed in the green as investors prepared for second quarter corporate earnings season.
Natural gas fell another 10.2 cents to $2.306 as weather forecasts called for the near-term heat wave in the major consuming regions to be replaced by cooler temperatures during the last week of July. The August-2019 WTI crude oil contract plunged $1.96 lower to $57.62 as production in the Gulf of Mexico continued to recover from storm-related shut-ins. Equities moved lower as investors weighed weak manufacturing data against solid monthly retail sales.
Front month natural gas edged 0.2 cents lower to $2.304 ahead of Thursday’s storage report, which was expected to show a build near the 5-year average. Crude oil shed another 84 cents to finish the session at $56.78 after the EIA revealed a slightly smaller-thanexpected 3.1-Million-barrel decrease in domestic oil inventories. Stocks drifted lower after President Trump noted there was a lack progress in trade talks between Chinese and U.S. negotiators.
Natural gas slid 1.7 cents lower to $2.287 even after the EIA reported a slightly smaller-than-expected 62 Bcf injection into storage, which was the first build below the 5-year average this season and widened the deficit to 143 Bcf. Crude extended its weeklong bearish trend even after Iran admitted to seizing a foreign tanker. By day’s end, prices fell $1.48 to $55.30. Equity markets retreated for the third consecutive day as investors reviewed a mix bag of second quarter corporate earnings reports.
Natural gas lost 3.6 cents to end the week at $2.251 as traders largely discounted the potential recordsetting heat wave over the weekend with cooler temperatures on the horizon. Oil rebounded 33 cents to $55.63 after the commodity dropped 8.5% from its peak the prior week as traders covered short positions ahead of the weekend. Stocks lost ground late in the session even after solid corporate earnings releases from tech heavyweights.
Natural gas prices will continue to closely follow the weather forecast as traders gauge the level of cooling demand.