MARKET COMMENTARY | For Week Ending 9/30
Milder temperatures and the prospect of lower demand weighs on natural gas.
Natural gas traders once again tested the $3.00 level on hopes above-normal temperatures would continue to fuel demand and reduce the storage surplus. By day’s end the front month natural gas contract climbed 4.2 cents to $2.997 per MMBtu. Crude oil rebounded $1.45 per barrel to $45.93 on renewed hopes OPEC would reach an agreement on limiting production. Declining financial shares and a weaker-than-expected new home sales report tugged equity markets lower.
The weather forecast called for above-normal temperatures to linger into the first week of October, but also showed cooler fall-like temperatures creeping into parts of the U.S. The cost of gas edged 0.1 cents lower to $2.996. Members of OPEC planned to meet in Algiers during the week to discuss the coordinated action to lift oil prices. However, both Saudi Arabian and Iranian officials downplayed the talks and oil prices fell $1.26 to $44.67. Gains in technology and consumer shares provided support for stocks during the day’s trade.
The October natural gas contract slid 4.4 cents lower to close and expire at $2.952 ahead of the following day’s storage report. The Energy Information Administration (EIA) revealed a 1.9 Mb drop in domestic oil inventories. Additionally, OPEC reached a production cap understanding during their meeting. Even though the details still needed to be hammered out, crude soared $2.38 to $47.05. Equities tracked with rising energy prices and ended the session on the upside.
The EIA reported a smaller-than-expected 49 Bcf injection, which increased working supplies in storage to 3,600 Bcf. Even so, the new prompt November contract closed 4.3 cents lower at $2.959. Crude oil pressed 78 cents higher to $47.83 as traders continued to weigh OPEC’s tentative agreement to cut production. Stocks tumbled after two days of gains as financial shares took a hit. Deutsche Bank, one of Europe’s largest banks, faced a potential $14 billion fine from the U.S. Justice Department.
With milder temperatures on the horizon, demand for the fuel had the potential to wane until winter heating demand picked up. Natural gas declined 5.3 cents to end the week at $2.906. Crude oil continued to operate in positive territory, settling 41 cents higher at $48.24. Equity markets recovered much of the prior day’s losses on the last trading day of the quarter.
Oil traders will have a basket of market-moving economic reports to scour though. Natural gas traders will closely monitor the weather forecast for signs of late-season demand.