Energy Market Watch: September 19, 2016

Jonathan Lee

MARKET COMMENTARY | For Week Ending 9/16
Natural gas swells to a two-and-a-half month high.

MONDAY 9/12
Updated weather forecasts showed a larger swath of above-normal temperatures around the U.S. With the prospect of late-season cooling demand, natural gas jumped 11.8 cents to $2.915 per MMBtu. Crude oil moved 41 cents higher to $46.29 per barrel to start the week after industry data showed stockpiles at the Cushing, Oklahoma storage facility declined by 1.2 Mb previous week. After Friday’s big rout, equity markets rebounded as investors focused on a speech by Federal Reserve official Lael Brainard, who is known to oppose interest rate increases.

TUESDAY 9/13
Natural gas slid 0.6 cents lower to $2.909 as the commodity came up against an upside technical resistance level. In its monthly oil market report, the International Energy Agency said global oil demand slowed during the third quarter, especially in China and Europe. At the same time, production stabilized, which would likely prolong the supply glut into next year. As a result, oil close $1.39 lower at $44.90. Equities erased prior session gains as uncertainty over the central bank’s monetary policy dampened investor moods.

WEDNESDAY 9/14
Natural gas traders took positions ahead of the following day’s weekly storage report and prices declined 2.0 cents to settle at $2.889. Crude oil dropped $1.32 to $43.58 after the Energy Information Administration (EIA) revealed an unexpected 0.6 Mb drop in domestic oil inventories, but also a larger-than-expected increase in refined product stockpiles. Equity markets rebounded during the session, led by gains in the tech sector and merger and acquisition activity.

THURSDAY 9/15
The EIA reported a slightly higher than expected 62 Bcf build to natural gas storage for the week ending September 9th. Even so, natural gas climbed 3.8 cents higher to $2.927. Volatility returned to equity markets as the upcoming Fed monetary policy meeting remained in focus. Crude oil pressed 33 cents higher to end the day at $43.91.

FRIDAY 9/16
Natural gas climbed 2.1 cents to a two-and-a-half-month high of $2.948 as the prior day’s storage report highlighted a shrinking surplus. Meanwhile, crude prices lost 88 cents to $43.03, a one-month low. Stocks ended a choppy trading week of trade on a down note with pressure coming from slumping financial and energy shares.

LOOKING AHEAD

All eyes will be focused on the Federal Reserve’s two-day monetary policy meeting, which concludes Wednesday.

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