Weekly Energy Market Watch | August 19, 2019

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

MARKET COMMENTARY | For Week Ending 8/16
Natural gas advances on smaller-than-expected storage injection.

Natural gas slipped 1.4 cents to close at $2.105 per MMBtu, just a few cents above the prompt month’s 3-year low, even as power markets in the South experienced a strong uptick in cooling demand. Equities sank lower on concerns over U.S.-China trade negotiations and the global economy. Crude oil gained 43 cents to $54.93 per barrel despite the economic worries rattling equity markets.

The Sept-2019 NYMEX natural gas contract climbed 4.2 cents to $2.147 on increased cooling demand expectations as a round of sweltering heat was expected to linger over Texas into the middle of the week. Equity markets rebounded on hopes a trade deal could be revived after the U.S. delayed tariffs on several Chinese goods to December 15th. Crude oil bounced $2.17 higher to $57.10 as renewed hopes of a U.S.-China trade deal bolstered demand expectations.

Natural gas eased 0.4 cents lower to settle at $2.143 ahead of the following day’s storage report, which was expected to show a build around 60 Bcf and would trim the deficit by another 10 Bcf. Crude oil fell $1.87 to $55.23 following the release of weak Chinese and German economic data and after the EIA reported an unexpected 1.6 Mb increase in oil inventories. Equities suffered their largest 1-day drop of the year after the yield on the 10-year U.S. Treasury note dipped below the 2-year note, raising concerns of an impending recession.

Natural gas jumped 8.9 cents to $2.232 after the EIA reported a smaller-than-expected 49 Bcf build to storage, which put stocks at 2,738 Bcf and kept the deficit unchanged at 111 Bcf. Crude prices closed 76 cents lower at $54.47 on cooling Middle East tensions after Gibraltar’s supreme court ordered the release of the seized Iranian tanker Grace 1. Stocks attempted to claw back some of Wednesday’s massive losses as upbeat retail sales data offset disappointing manufacturing data.

Natural gas gave back some of Thursday’s gains, which were inspired by a weaker-than-expected storage build, as traders locked in profits ahead of the weekend. The prompt-month contract closed 3.2 cents lower to end the week at $2.200. Crude managed to eke out a 40-cent gain to settle at $54.87 even after OPEC cut its demand forecast for the remainder of the year to 1.10 Million barrels per day from 1.14 Mbpd. Equities pressed higher during the day’s session after U.S. Treasury yields recovered from multi-year lows.

Natural gas will likely need some sustained heat during the final third of August to support any additional price gains.

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