MARKET COMMENTARY | For Week Ending 5/13
Natural gas finishes the week unchanged; crude oil propelled higher by supply disruptions.
Natural gas trade was quiet with June futures trading in a 4 cent range to settle nearly unchanged at $2.098 per MMBtu. Weekend updates to the weather forecast called for a renewed bout of cold for much of the U.S. in the coming week. West Texas Intermediate (WTI) crude oil lost $1.22 to finish at $43.44 per barrel as investors anticipated another inventory expansion to be detailed in the week’s round of storage reports. Hawkish Fed commentary and dovish ECB remarks fueled the dollar’s ascent against competing currencies. U.S. stocks fell slightly, with shares weighed lower by falling oil prices and positioning ahead of Friday’s retail sales report.
Driven by slipping production and expectations of increased heating and generation, natural gas gained 6 cents to $2.158. Various production outages around the globe helped lift WTI oil futures $1.22 to $44.66. The dollar rose against key competitors for a sixth straight day, helped by a struggling euro weighed lower by weak industrial data from Germany. An uptick in oil prices and the achievement of an 8-month high in job openings helped U.S. benchmarks capture their best gains in two months and place the DJIA within earshot of the 18,000 mark.
Natural gas traders took positions ahead of the following day’s Energy Information Administration (EIA) storage report and the cost of gas climbed a penny to $2.173. The crude oil session saw WTI ascend $1.57 to $46.23, with supply disruptions in Canada, Nigeria, and Libya supporting the bullish sentiment. A slide in consumer-discretionary stocks weighed on the broader market and pressured the main U.S. benchmarks to a negative close that erased much of Tuesday’s sizable gains.
The EIA reported a 56 Bcf injection of natural gas into storage, which mostly met market expectations. As a result, natural gas dipped 1.8 cents to $2.155. Crude added 47 cents to close at $46.70, the highest level of 2016 on continued supply disruption concerns. Stocks traded in a mixed fashion throughout the day.
June 2016 natural gas futures tumbled, finishing the session 5.9 cents lower at $2.096 and ending the week right around where it started. Crude oil retreated 49 cents to settle at $46.21. U.S. stocks closed broadly lower, with the DJIA and S&P 500 each logging their third straight week of losses, while the Nasdaq chalked up its fourth week of losses (down 5.8% for the year).
Equities and currencies will look for guidance from this week’s release of FOMC minutes. Natural gas participants will look for the start of cooling demand season and how it will impact storage replenishment efforts.