Energy Market Watch: May 23, 2016

Jonathan Lee

MARKET COMMENTARY | For Week Ending 5/20
Natural gas fluctuates on the week as traders balance the supply and demand outlook.

MONDAY 5/16
June natural gas futures kicked off the week to the downside, settling 7 cents lower at $2.03 per MMBtu. West Texas Intermediate (WTI) crude oil had a strong performance on the day, jumping $1.51 higher to $47.72 per barrel as continued supply disruptions in Canada and overseas supported gains. Opportunistic investors capitalized on the prior week’s declines, and with the help of rising oil prices, U.S. stocks were propelled higher during the session.

TUESDAY 5/17
Weather maps showed a mix of degree days in the coming week, lending to a mostly neutral weather factor for natural gas and electricity markets. As a result, natural gas prices climbed 2 cents to $2.05. Large oil production outages in various locations around the globe continued to be a forceful headline and the oil complex pushed 59 cents higher to $48.31. Equities tumbled after a trio of economic reports came in positive, but also reflected a very slow grind for the economy.

WEDNESDAY 5/18
Natural gas futures were pressed lower across the board, with the June contract finishing 5 cents lower at $2.00. The Energy Information Administration (EIA) reported a 1.3 mb increase to domestic inventories. Oil prices slid 12 cents lower to $48.19. The U.S. dollar rallied to a one-month high after the FOMC April meeting minutes revealed the possibility of a June rate hike if the economic data proved worthy. Stocks were mostly flat on the day.

THURSDAY 5/19
The EIA reported a 73 Bcf injection of natural gas into storage, which was slightly lower than the market consensus. As a result, natural gas climbed 4 cents to $2.04. The cost of oil moved between positive and negative territory before eventually closing 3 cents lower at $48.16. Investors sold off U.S. stocks amid prospects of an interest rate hike this summer.

FRIDAY 5/20
Natural gas added 2 cents to finish the week at $2.06, netting a 4-cent weekly decline. The June crude oil contract slid 41 cents lower to close and expire at $47.75. Equity markets ended the day on a positive note after the National Association of Realtors reported a 1.7% monthly increase in existing home sales.

LOOKING AHEAD

Investors will be looking ahead to Friday’s second estimate of Q1 2016 GDP for insight into the nation’s economic growth. Natural gas participants will continue to monitor the weather forecast for signs of increased demand.

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