MARKET COMMENTARY | For Week Ending 2/17
Natural gas falls to its lowest level since late November.
The short-term weather forecast called for above-normal temperatures to cover the eastern three-fourths of the country in the coming week. The prospect of elevated heating demand diminished and the prompt month natural gas contract fell 9.0 cents to $2.944 per MMBtu. Crude oil retreated 93 cents to $52.93 as investors continued to monitor OPEC’s production output. Libya and Nigeria, which were exempt from cuts, increased production in January, while Saudi Arabia slashed more than their agreed amount. Equity markets extended their reach into record territory with support from rising tech and financial shares.
Natural gas continued to slide as weather forecasts showed a higher confidence of above-normal temperatures in the eastern half of the nation and prices closed 3.9 cents lower at $2.905. The March crude oil contract inched 27 cents higher to $53.20 after official data confirmed OPEC’s production cut deal was holding. OPEC reported an 890,000 barrel/day decline in oil output from the prior month, which was roughly a 90% compliance rate. Equities pressed higher after Fed Chairwoman Janet Yellen offered an upbeat outlook on the economy.
Natural gas traders covered short positions and the March contract rebounded 2.0 cents to $2.925. Crude oil dipped 9 cents to $53.11 after the Energy Information Administration (EIA) reported a massive 9.5 million barrel increase in domestic inventories. Stocks marched higher with support from a batch of better-than-expected economic reports and rising financial shares.
Natural gas lost 7.1 cents to end the day at $2.854 after the EIA revealed a smaller-than-expected 114 Bcf draw from storage. The figure was also below last year’s 136 Bcf draw and the five-year average’s 156 Bcf draw. Oil prices gained 25 cents to $53.36 as traders continued to weigh OPEC production cuts against U.S. output increases. Equities traded in a mixed fashion even after a batch of mostly positive economic reports.
Natural gas moved between small gains and losses and the front month eventually settled 2.0 cents lower at $2.834, the lowest level since late November. Similarly, crude oil traded in a narrow range before prices ended the day 4 cents higher at $53.40. With no major economic reports to digest, investors moved to the sidelines ahead of the extended weekend.
Markets will be closed on Monday in observance of President’s Day. When trading resumes on Tuesday, crude oil and natural gas traders will renew their focus on the supply and demand balance.