Weekly Energy Market Watch | March 20, 2017

Jonathan Lee

MARKET COMMENTARY | For Week Ending 3/17
Natural gas marginally lower week-over-week.

MONDAY 3/13
Natural gas posted its fourth consecutive winning session as a major nor’easter was expected to bring blizzard conditions to the Midwest and Northeast during the week and potentially boost demand. The April contract climbed 3.5 cents to settle at $3.043 per MMBtu. Crude oil moved between small gains and losses as investors locked in profits following the prior week’s 9.1% decline. By day’s end, the commodity dipped 9 cents to $48.40 per barrel. Equity markets seesawed during the session as investors looked ahead to the week’s Federal Reserve monetary policy meeting.

TUESDAY 3/14
Natural gas retreated 10.5 cents to $2.938 as the 6-10 day forecast called for above-normal temperatures to cover much of the nation. Crude oil fell 68 cents to $47.72 on fears OPEC’s production cut agreement could begin to unravel after it was learned Saudi Arabia increased output by 263,000 barrels a day in February to over 10 million barrels a day. Equities struggled to find direction as the Fed’s monetary policy meeting began.

WEDNESDAY 3/15
Natural gas rebounded 4.3 cents to $2.981 after a slightly cooler weather forecast for late-March helped stoke expectations for heating demand. Crude oil managed to snap a seven-day losing streak after the Energy Information Administration (EIA) documented a 0.2 million barrel decline in domestic inventories. The April WTI contract jumped $1.14 to close at $48.86. Equity markets soared after the Fed raised interest rates by 25 basis points to 0.75 – 1.00 percent. Furthermore, the Fed maintained their economic outlook and expected to raise interest rates at least twice more this year.

THURSDAY 3/16
The EIA revealed a slightly smaller than expected 53 Bcf withdrawal from natural gas storage. As a result, the cost of gas slid 7.9 cents lower to $2.902. Crude oil gave back 11 cents to settle at $48.75 amid concerns OPEC’s production cuts wouldn’t be enough to lift prices. Stocks traded in a mixed fashion as investors digested the day’s basket of economic reports.

FRIDAY 3/17
Natural gas climbed 4.6 cents to $2.948 as traders gauged whether a cooler forecast for the Northeast would translate into increased heating demand. Crude oil managed to eke out a 3-cent gain to settle at $48.78. Equity markets lost ground late in the session even after a report showed industrial production was steady during February.

LOOKING AHEAD

Oil traders will continue to pay close attention to the global supply situation. Natural gas traders likely will stay tuned in to market fundamentals, notably temperature forecasts and storage levels.

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