MARKET COMMENTARY | For Week Ending 5/6
Natural gas seesaws as traders assess the supply and demand balance.
June natural gas futures kicked off the month of May by tumbling 13.6 cents to $2.042 per MMBtu, right around the technical support level. Crude oil settled $1.14 lower at $44.78 per barrel as investors continued to profit from April’s success and also viewed a recent round of data as bearish for demand. The U.S. dollar lost ground against key competitors for a sixth session and fell to its weakest level since January 2015 as economic data suggested the Fed would push back another rate hike. Conversely, stocks pushed higher on the rate hike sentiment.
Weather continued to be a minimal driver for a broad swath of the natural gas and electricity futures markets. Natural gas offset previous session losses and stepped 4.4 cents higher to $2.086. The recent oil rally continued to run out of steam, with West Texas Intermediate (WTI) crude settling $1.13 lower at $43.65. Stocks fell broadly despite positive consumer data via monthly motor vehicle sales as investors questioned global economic growth.
Lingering heating demand in the Northeast helped push natural gas 5.5 cents higher to $2.141. The Energy Information Administration (EIA) reported a 2.8 mb increase in domestic inventories. Even so, oil prices edged 13 cents higher to $43.78. Equities were tugged lower after a report detailing service industry strength was offset by weaker-than-expected private-sector jobs data.
The EIA revealed a 68 Bcf injection of natural gas into storage, which was slightly higher than market expectations. As a result, natural gas retreated 6.5 cents to $2.076. Crude rose 54 cents to $44.32, but an early price jump from the Alberta wildfires tempered after investors realized much of the production was north of the fires. The dollar extend gains into a third day, boosted by hawkish comments from the San Francisco Fed President and also data showing the total number of American’s collecting unemployment falling to its lowest level in 16 years. Stocks were mixed on the day.
Natural gas futures firmed 2.5 cents to settle at $2.101. WTI climbed 34 cents higher to $44.66, but snapped a streak of 4 weekly gains in a row. U.S. stocks finished the session higher, but booked a second consecutive weekly decline as investors grappled with lackluster economic data and its impact on Fed policy decisions.
Natural gas traders will pay close attention to the weather forecast and weekly storage report to gauge supply and demand.