MARKET COMMENTARY | For Week Ending 12/2
Natural gas traders drive the fuel to a near two-year high.
Updated weather forecasts showing an increased area of below-normal temperatures drove the December natural gas contract 14.7 cents higher to close and expire at $3.232 per MMBtu. Crude oil climbed $1.02 higher to $47.08 per barrel in anticipation of the Organization of Petroleum Exporting Countries’ (OPEC) Wednesday production cut meeting. Ahead of the meeting, the cartel had yet to form a consensus regarding the amount each country would need to slash. Equity markets operated in the red to start the week after an extended rally pushed the major indexes to repeated record highs the prior week.
Natural gas held steady as traders took a breather following six days of gains that propelled the front month 19.6% higher. The new prompt January natural gas contract dipped 0.5 cents to $3.315. Oil ministers from Iran and Indonesia expressed some reluctance to commit to cuts. As a result, the January West Texas Intermediate (WTI) contract lost $1.85 to close at $45.23. Stocks edged higher after the Commerce Department revealed the U.S. economy grew at an annualized rate of 3.2% during the third quarter.
Natural gas gained 3.7 cents to $3.352 as traders took positions ahead of the following day’s storage report. In their much anticipated meeting in Vienna, OPEC reached an agreement to cut oil production by 1.2 million barrels a day, representing about 1% of global production. Oil prices soared $4.21 to $49.44. Equity markets closed out their best month since March with support coming from the upbeat oil market.
Natural gas rallied to its highest level in nearly two years after the EIA revealed a 50 Bcf withdrawal from storage. The cost of gas jumped 15.3 cents to settle at $3.505. Crude oil extended the prior day’s 9.3% surge as traders continued to cheer OPEC’s decision. Prices climbed $1.62 to $51.06. Stocks were mostly higher during the trading session with support coming from rising energy shares.
After natural gas moved into overbought status, the fuel lost 6.9 cents to end the week at $3.436. Crude oil continued to press higher, settling 62 cents higher at $51.68. The Labor Department reported 178,000 jobs were created in November, slightly higher than the market consensus. Even so, equity markets fluctuated between positive and negative territory during the day.
Crude traders will likely shift their attention to a December 10th meeting between OPEC and non-OPEC producers such as Russia. Weather forecasts for colder temperatures will continue to fuel natural gas price gains.