MARKET COMMENTARY | For Week Ending 7/29
Natural gas soars after the EIA reveals the lowest summer injection since 2006.
Natural gas pulled back 3.0 cents to $2.747 per MMBtu to start the week after the fuel stretched to a two-week high the prior Friday. Oil prices slipped $1.11 to a two-and-a-half month low of $43.08 per barrel on global supply glut concerns. Industry data showed inventories at Cushing, Oklahoma climbed 1.1 Mb the previous week. Stocks retreated as cautious investors moved to the sidelines ahead of a busy week of corporate earnings and central bank meetings.
Natural gas notched its first back-to-back losing session in over a month, sliding 3.5 cents to $2.712. Even though hot temperatures ratcheted up demand, concerns remained over whether it would be enough to work down the storage surplus prior to winter heating season. The West Texas Intermediate (WTI) September crude contract dipped 21 cents lower to $42.92. Equities traded in a mixed fashion after a batch of weaker-than-expected corporate earnings reports.
Natural gas traders positioned ahead of the Energy Information Administration’s (EIA) weekly storage report on the August contract’s expiration day. The August contract closed and expired 4.0 cents lower at $2.662. The EIA reported an unexpected 1.7 Mb increase in domestic oil inventories and prices fell $1.00 to $41.92. Equity markets stalled as investors digested the Fed’s monetary policy meeting announcement. The Fed upgraded their assessment of the economy’s performance, particularly their view of the labor market after June’s solid jobs report. They also kept rates unchanged but opened the door for a move as soon as September.
The new prompt September gas contract soared 21.3 cents to $2.873 after the EIA reported a smaller-than-expected 17 Bcf injection into storage. Global supply glut concerns continued to weigh on the oil market and prices fell 78 cents to $41.14. Disappointing corporate earnings reports tugged equity markets lower in the day’s session.
After rallying 8% the prior session, natural gas added 0.3 cents to end the week at $2.876. Crude rebounded from a three-month low and gained 46 cents to close at $41.60. Equity markets finished the week on a down note after the Commerce Department revealed a sluggish 1.2% annualized growth rate for the second quarter.
Investors will look ahead to Friday’s highly anticipated monthly jobs report. Natural gas traders will closely monitor Thursday’s storage report to gauge the supply and demand balance.