MARKET COMMENTARY | For Week Ending 4/29
Natural gas retreats following larger-than-expected storage injection.
Natural gas futures kicked off the week settling the session 7.7 cents lower at $2.063 per MMBtu. However, contango in the forward NYMEX gas curve increased due to concerns of a tighter supply-demand balance for summer and beyond. West Texas Intermediate (WTI) crude oil finished $1.09 lower at $42.64 per barrel, weighed lower by prospects of another large inventory build at Cushing, Okla. The U.S. dollar stumbled ahead of Federal Reserve and Bank of Japan decisions later in the week. U.S. stocks fell after a round of disappointing corporate earnings.
Weather updates were tilted bearish with mild temperatures across most of the U.S. As a result, natural gas dipped 3.1 cents to close at $2.032. WTI crude oil settled $1.40 higher at $44.04. The dollar sank for a second day after weak durable goods data gave investors one more reason to doubt the Fed would hike interest rates again any time soon. Stocks were mostly mixed ahead of a barrage of tech earnings and Wednesday’s policy statement from the FOMC.
With the weather forecast continuing to call for mild temperatures, the May gas contract lost 3.7 cents to close and expire at $1.995. The Energy Information Administration (EIA) documented a 2.0 mb increase in domestic oil inventories, which was above the market consensus. Even so petroleum prices climbed $1.29 to $45.33. Stocks drifted higher after the Federal Reserve’s April policy outlook offered almost no new information for investors.
The EIA weekly natural gas storage report showed a build of 73 Bcf for the week ending April 22nd, which was slightly above analyst estimates. The new prompt June contract slipped 7.5 cents lower to $2.078. The oil market received a boost on continued dollar weakness induced by the FOMC commentary. Oil finished up 70 cents at $46.03. Equities plunged after the Commerce Department reported first quarter U.S. GDP growth came in at a lowerthan-expected annualized rate of 0.5%.
Natural gas futures jumped 10 cents to settle at $2.178 for the session. Oil prices ended the day down 11 cents at $45.92, but notched a monthly gain of nearly 20%. Stocks declined after a series of poor earnings reports and underperforming Chicago PMI data.
Oil traders will have a full week of market-moving economic reports to digest. Natural gas traders will continue to focus on the supply and demand balance to determine price direction.
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