Weekly Energy Market Watch | January 16, 2016

Jonathan Lee

MARKET COMMENTARY | For Week Ending 1/13
Natural gas prices fueled by larger-than-expected storage draw.

MONDAY 1/9
Natural gas dove 18.2 cents lower to $3.103 per MMBtu after updated weather forecasts called for above normal temperatures to cover the lower 48 states during the following 8-14 days. Crude oil retreated $2.03 to $51.96 per barrel on global oversupply concerns and slipping faith in OPEC’s production cut agreement. Equity markets traded in negative territory to start the week with downside pressure coming from falling energy shares.

TUESDAY 1/10
Natural gas rebounded 17.5 cents to $3.278 as traders placed initial bets heading into the week’s storage report release. The figure was expected to be back in the triple digits, up from the prior week’s 49 Bcf draw. Oil prices slipped $1.14 to $50.82 after it was reported that Libya, which is exempt from production cuts, had more than tripled its oil output in the last six months. Stocks edged mostly higher during the day’s session with support from financial and industrial companies.

WEDNESDAY 1/11
Gas seesawed between positive and negative territory as traders positioned ahead of the week’s storage report. Prices eventually fell 5.4 cents to $3.224. Crude climbed $1.43 higher to $52.25 after the Energy Information Administration (EIA) showed refiners processed a record 17.1 Mb/day of crude oil into fuel the prior week. Equities pressed toward record highs as investors looked to get policy clues from President-elect Trump’s first news conference.

THURSDAY 1/12
Natural gas soared 16.2 cents higher to $3.386 after the EIA revealed a larger-than-expected 151 Bcf withdrawal from storage. Oil prices gained 76 cents to $53.01 with support coming from a weaker dollar and news Saudi Arabia cut production by more than previously agreed. Equity markets gave back much of Wednesday’s gains as investors hoped to garner more policy detail in President-elect Trump’s news conference.

FRIDAY 1/6
Natural gas ended the day 3.3 cents higher at $3.419 even as weather forecasts remained bearish for the coming week. Oil traders maintained their focus on how producers were implementing their pledged production cuts and the cost of oil declined 64 cents to $52.37. Equities traded in a mixed fashion to end the week after holiday retail sales data failed to impress investors.

LOOKING AHEAD

Markets will be closed Monday in observance of Martin Luther King Jr. Day. Investors will have a batch of market-moving economic reports to digest mid-week. Natural gas traders will continue to contemplate the supply and demand balance as winter progresses.

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