MARKET COMMENTARY | For Week Ending 7/21
Natural gas retreats late-week as temperatures seen moderating.
Natural gas edged 4.0 cents higher to $3.020 per MMBtu as updated weather forecasts favored abovenormal temperature trends through the end of the month. Crude oil snapped its five-day winning streak as traders looked ahead to the week’s inventory report. The August WTI contract slid 52 cents lower to $46.02 per barrel. Equity markets held near record territory as investors prepared for a heavy week of second quarter corporate earnings reports.
Natural gas surged another 6.8 cents to $3.088 with continued support from increased demand expectations. Crude oil rebounded 38 cents to $46.40 due to a weaker U.S. dollar and a potential decline in Saudi Arabian oil exports. Stocks slipped after the Senate Republican’s latest bill aimed at repealing and replacing the Affordable Care Act derailed.
Natural gas moved into consolidation mode as traders locked in profits following recent gains. The August NYMEX contract dipped 2.2 cents to finish the day at $3.066. The Energy Information Administration (EIA) revealed a larger-than-expected 4.7 million barrel decline in domestic oil inventories. As a result, crude prices jumped 72 cents higher to settle at $47.12. The Dow Jones Industrial Average, S&P 500, and NASDAQ notched a trio of record closes with support from rising energy and healthcare shares.
Natural gas declined another 2.3 cents to $3.043 even after the EIA reported a smaller-than-expected 28 Bcf injection of gas into storage. The surplus compared to the five-year average narrowed to 5.0%, while the deficit compared to last year widened to 9.1%. Crude oil pulled back from a seven-week high as traders shifted their focus to accelerating U.S. production. The August WTI contract eased 33 cents lower to close and expire at $46.79. Equities backed away from record highs with downside pressure from a string of weaker-than-expected corporate earnings reports and slower growth reported in a Philadelphia manufacturing survey.
Natural gas soured after updated weather forecasts called for predominately normal temperatures to cover the eastern half of the nation in the coming six to ten day period. As a result, the fuel shed 7.3 cents to end the week at $2.970. The new prompt WTI September oil contract fell $1.15 to $45.77 on doubts OPEC would stick to its production cut quota. Equities finished the day moderately lower as investors continued to focus on second quarter corporate earnings releases.
Investors and crude traders will have a heavy slate of economic reports to sift through. Natural gas traders will continue to closely monitor weather forecasts throughout the week.