MARKET COMMENTARY | For Week Ending 6/3
Natural gas soars to near six-month high on increased cooling demand.
Markets were closed in observance of Memorial Day.
Natural gas traders propelled prices higher as hot temperatures enveloped much of the nation and helped spur increased cooling demand. Gas jumped 11.9 cents to end the day at $2.288 per MMBtu. West Texas Intermediate (WTI) crude oil continued to slowly retreat from the $50 per barrel mark and ended the day 23 cents lower at $49.10. The dollar stabilized near a two-month high after Fed Chairwoman Janet Yellen said the prior Friday that a rate hike may be coming in a matter of months if the economy continued to improve. Equity markets traded mostly in negative territory after the Conference Board reported consumer confidence dipped during the month of May.
Natural gas climbed once again as warmer temperatures boosted hopes of increased cooling demand. The July prompt month contract advanced 9.3 cents to $2.381. The WTI July contract moved between small gains and losses before declining 9 cents to $49.01. Equities were mostly unchanged as investors digested mixed economic data and looked ahead to the release of the Fed’s Beige Book later in the day for insight as to whether the Fed would raise interest rates during their June meeting.
The EIA reported an 82 Bcf build to natural gas storage for the week ending May 27th. The figure was below the market consensus, last year, and the five-year average for this time of the year. As a result, natural gas gained 2.4 cents to $2.405, the highest prompt month settle since early January. Crude oil traders trimmed early losses after the EIA revealed a 1.4 mb drop in domestic inventories and oil prices closed 16 cents higher at $49.17. The Fed’s Beige Book released the prior day highlighted weaker economic growth compared to last month’s report. With the prospect the Fed would delay a rate hike helped push stocks higher on the day.
Baker Hughes showed gas rigs fell by 5 to 82, the lowest level since they began keeping record and an increase of 9 oil rigs to 325 in their weekly report. After reaching their highest level in nearly six months, natural gas declined 0.7 cents to end the week at $2.398. With the prospect of increased oil production, oil lost 55 cents to settle at $48.62, the first weekly loss in a month. Equities faltered after the U.S. Department of Labor reported just 38,000 jobs were created during May, the fewest amount of jobs created in more than five years.
Natural gas traders will maintain their focus on the weather forecast in anticipation of hot summer temperatures.