MARKET COMMENTARY | For Week Ending 5/27
Natural gas moves higher with above normal temperature forecast in view.
June natural gas futures declined less than a penny to settle at $2.055 per MMBtu, offsetting what appeared to be a more bullish picture earlier in the day. West Texas Intermediate (WTI) crude oil came under pressure from dollar strength and Alberta oil workers returning to work as the fire threat recedes there. As a result, the cost of petroleum slid 33 cents to $48.08 per barrel. U.S. stocks fluctuated between small gains and losses but ended the session in the red.
Near-term weather forecasts called for above-normal temperatures to cover the eastern two-thirds of the nation, which would help support natural gas and electricity futures. Even so, natural gas traders pushed prices 7.5 cents lower to $1.980. Global supply and refining disruptions drove WTI crude oil 54 cents higher to $48.62. The U.S. dollar stepped sharply higher and achieved a 2-month high against the euro as investors anticipated a summer rate increase. Rallies in the financial and technology sectors helped U.S. stocks close higher.
Natural gas futures pared early losses before eventually finishing the day 1.2 cents higher at $1.992. The Energy Information Administration (EIA) reported a 4.2 mb decrease to domestic inventories. Oil prices jumped 94 cents to $49.56. Higher crude oil prices helped energy shares rally and lifted the S&P 500 to its best finish in nearly a month.
The EIA revealed a 71 Bcf injection of natural gas into storage, as production around 2 Bcf/day below year-ago levels contributed to the slimmer injection this year. The June natural gas contract dipped 2.9 cents to close and expire at $1.963. Oil prices lost 8 cents to end the day at $49.48, while equity markets traded in a mixed fashion.
The new prompt July natural gas contract gained 1.8 cents to $2.169 ahead of the extended Memorial Day weekend. Crude oil moved between small gains and losses before closing 15 cents lower at $49.33. The S&P 500 posted its biggest weekly gain in two months as stocks looked passed the pending rate hike to finish the session higher.
Markets were closed Monday in observance of Memorial Day. Oil traders will be dealt a fresh round of U.S. economic data this week to help them gauge the demand outlook. Natural gas traders likely will focus on the nation’s cooling demand and its effect on pending storage injections.