MARKET COMMENTARY | For Week Ending 10/7
Natural gas soars 9.9% week-overweek; crude settles above $50 for first time since June.
Natural gas fluctuated between positive and negative territory during the day’s trade. The cost of gas settled 1.7 cents higher at $2.923 per MMBtu. Crude oil extended its winning streak to 4 days as traders continued to assess OPEC’s tentative production cap agreement. The November West Texas Intermediate (WTI) contract gained 57 cents to $48.81 per barrel. After posting the best quarter of the year, stocks began October in negative territory even after a better-than-expected read on the manufacturing sector.
Updated weather forecasts called for above-normal temperatures throughout the western half of the nation, with below-normal temperatures in the Northeast. Natural gas managed to reverse course after testing two-week lows to end the day 4.1 cents higher at $2.964. Crude prices moved between small gains and losses before eventually closing 12 cents lower at $48.69. With little fresh economic data to digest, stocks dipped lower.
Natural gas gained 7.7 cents to $3.041 as traders positioned ahead of the following day’s storage report. The Energy Information Administration (EIA) revealed a larger-than-expected 3.0 Mb decline from domestic oil inventories. The November WTI contract jumped $1.14 to $49.83. Equity markets rebounded on stronger-than-expected service sector growth and rising oil prices.
Natural gas managed to edge 0.8 cents higher to $3.049 even after the EIA reported a larger-than-expected 80 Bcf injection to storage. Total working gas in storage is at 3,680 Bcf, which is 2.1% higher than last year at this time. Oil prices settled 61 cents higher at $50.44, the first close above $50 per barrel since June, on hopes the market would begin to work through its global supply glut. Equities were slightly lower as investors looked ahead to the next day’s highly anticipated monthly jobs report.
Natural gas rallied 14.4 cents higher to $3.193 even with the bearish two-week weather forecast, a much larger-than-expected storage injection reported Thursday, and power outages in the Southeast due to Hurricane Matthew. The Labor Department revealed 156,000 jobs were created during September, which was lower than the market consensus. Equity and oil markets retreated after the release. Oil slid 63 cents to end the week at $49.81.
Oil traders will monitor a meeting of global oil producers in Istanbul. Natural gas traders will pay close attention to this week’s storage report to gauge the supply and demand balance.