MARKET COMMENTARY | For Week Ending 11/25
Natural gas marches higher as cold winter temperatures arrive.
Natural gas received a lift from a wintry chill expected to move across the Midwest and Northeast during the week. Bullish traders had been chomping at the bit for cold winter temperatures to arrive and boost heating demand. As a result, natural gas prices jumped 10.7 cents higher to $2.950 per MMBtu. Iraq and Iran, two of the more reluctant members of OPEC, reportedly backed the cartel’s oil production cut proposal. Traders welcomed the news and the December West Texas Intermediate (WTI) crude contract soared $1.80 to close and expire at $47.49. Equities edged higher to start the holiday-shortened week, with support coming from rising energy and mining shares.
Natural gas worked its way to a three-week high as colder temperatures continued to boost demand expectations. The cost of gas climbed another 3.2 cents to settle at $2.982. The new prompt January WTI oil contract slid 21 cents lower to $48.03 as traders took positions ahead of a vital November 30th OPEC meeting. Equity markets flirted with record territory after a report indicated existing home sales were at their highest rate since February 2007
Natural gas surged 4.4 cents higher to $3.026 after the Energy Information Administration (EIA) reported the first withdrawal of the winter season. Supplies declined 2 Bcf, which compared to the market consensus of a 6 Bcf build. Crude oil moved between small gains and losses after the EIA reported a 1.3 Mb decline in domestic inventories. By day’s end, oil prices dipped 7 cents lower to $47.96. Equity markets posted another day of gains after a slew of mostly positive economic data was released.
Markets were closed in observance of the Thanksgiving Day holiday.
Increased heating demand expectations continued to fuel the natural gas price rally. Traders extended the winning streak to five days and the December contract climbed 5.9 cents higher to $3.085. Crude oil traders grew somewhat skeptical OPEC officials would be able to reach agreement in their upcoming meeting and the commodity suffered its biggest decline in two months. The January WTI contract dropped $1.90 to finish the day at $46.06. The major indexes all closed Black Friday at record highs, capping a third straight week of gains.
Equity and crude oil traders will pay close attention to GDP and employment data released during the week. Natural gas traders will continue to focus intently on the nation’s weather forecast to bolster heating demand expectations.