Weekly Energy Market Watch | September 9, 2019

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

MARKET COMMENTARY | For Week Ending 9/6
Natural gas lurches higher amid sustained heat wave in the South.

Markets were closed in observance of the Labor Day holiday.

When trading resumed, natural gas jumped 7.3 cents to $2.358 per MMBtu as traders discounted the potential weaker power burn along the East Coast due to Hurricane Dorian and focused on the heat wave in the major consuming South Central. Equity markets traded in the red as a drop in manufacturing activity elevated concerns on the U.S.-China trade war. Crude oil settled $1.16 lower at $53.94 per barrel due to a stronger dollar and on reports of rising OPEC production at a time when global demand was in question.

The Oct-2019 NYMEX natural gas contract closed another 8.7 cents higher at $2.445, a nearly 8-week high, as traders continued to key on the heat wave in the southern states and the potential for strong late-summer cooling demand. Crude oil rebounded $2.32 to $56.26 as a potential visit from Russian Energy Minister Alexander Novak to Saudi Arabia came as a positive sign for cooperation around managing production quotas. U.S. stocks followed a broader global rally higher on de-escalating developments surrounding political tensions in Hong Kong and Brexit negotiations.

The front-month natural gas contract dipped a penny lower to settle at $2.435 after the EIA reported a larger-than-expected 84 Bcf injection into storage, which narrowed the deficit to the 5-year average to 82 Bcf. Crude inched 4 cents higher to $56.30 after the EIA revealed a 4.8 Million barrel decline in domestic oil stocks. Equities pushed higher after the U.S. and China announced another round of trade talks would be held in Washington D.C. in October.

Natural gas pressed 6.1 cents higher to end the week at $2.496 as weather forecasts called temperatures to warm in the major consuming Northeast, while sustained heat continued to blast Texas. Crude edged 22 cents higher to finish the session at $56.52 as traders hoped negotiators could reach an agreement in the next round of U.S.- China trade talks. Stocks landed in positive territory even after the Labor Department reported a smaller-than-expected 130,000 jobs were created during the month of August.

Natural gas traders will continue to closely monitor weather forecasts for late-season heat waves that may boost natural gas demand.

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