MARKET COMMENTARY | For Week Ending 10/14
Lower-than-expected storage build propels natural gas to a 22-month high.
Natural gas continued to add to the prior week’s 9.9% rally as traders bet the market was moving closer to re-balancing. The November natural gas contract climbed 8.2 cents higher to settle at $3.275 per MMBtu. Russian President Vladimir Putin said he supported international efforts to limit oil supply. As a result, the November West Texas Intermediate (WTI) contract soared $1.54 higher to $51.35 per barrel. Stocks started the week on a positive note as rising energy shares lifted the major equity benchmarks higher.
Updated weather forecasts called for above-normal temperatures throughout the eastern three-fourths of the nation, with below-normal temperatures in the West. After rallying to its highest settle since December 19, 2014, natural gas pulled back 3.8 cents to $3.237. Oil prices slid 56 cents lower to $50.79 after the International Energy Agency (IEA) revealed OPEC pumped a record amount of oil last month. A disappointing start to corporate earnings season soured investor moods and equities lost ground.
Natural gas traders took positions ahead of the following day’s storage report and the cost of gas dipped 2.7 cents to $3.210. Crude oil trended back toward $50 per barrel on skepticism over OPEC’s tentative production deal. By day’s end, prices closed 61 cents lower at $50.18. Equity markets traded in a mixed fashion as investors dug through the afternoon release of the minutes from the Federal Reserve’s recent monetary policy meeting.
Natural gas soared 13.1 cents higher to $3.341 after the Energy Information Administration (EIA) reported a smaller-than-expected 79 Bcf injection, which brought supplies to 3,759 Bcf. Crude oil fluctuated between positive and negative territory after the EIA reported a 4.9 Mb increase in domestic inventories. Prices climbed 26 cents to $50.44. Equity markets tumbled as investors found little to cheer in the Fed minutes or in fresh Chinese economic data.
Natural gas took a breather after Thursday’s storage-inspired rally. After the cost of gas jumped to a 22-month higher, the November natural gas contract lost 5.6 cents to $3.285. Crude faced downside pressure from a stronger dollar and prices dipped 9 cents to end the week at $50.35. Strong bank earnings helped drive stocks higher during the day’s trade.
Oil traders will have a basket of manufacturing reports to digest to help determine upcoming demand. Natural gas traders will continue to pay close attention to the weather forecast for signs of colder temperatures.