Weekly Energy Market Watch | August 14, 2017

Jonathan Lee

MARKET COMMENTARY | For Week Ending 8/11
Natural gas presses higher as storage surplus narrows.

MONDAY 8/7
Natural gas rebounded toward previous support levels even as the weather forecast called for below-normal temperatures to cover much of the nation into mid-August. By day’s end, the September contract climbed 3.0 cents higher to $2.801 per MMBtu. Crude oil dipped 19 cents lower to $49.39 per barrel as traders awaited the outcome of OPEC’s two-day meeting in Abu Dhabi. Members were discussing the slipping compliance rate, which fell to 86% in July. Spillover from Friday’s mostly upbeat jobs report helped the Dow inch toward its tenth consecutive day in the green.

TUESDAY 8/8
Natural gas edged 2.1 cents higher to settle at $2.822 as the short-term weather forecast remained unchanged. Crude oil fluctuated between small gains and losses before eventually closing 22 cents lower at $49.17 as traders awaited the conclusion of OPEC’s two-day meeting. Equity markets were on track for another round of records with support coming from rising financial, energy, and technology stocks, but fell into negative territory late in the session.

WEDNESDAY 8/9
Natural gas moved 6.1 cents higher to $2.883 as traders positioned ahead of the following day’s weekly storage report, which was expected to show a build in the low 30s. Crude gained 39 cents to close at $49.56 after the Energy Information Administration (EIA) documented a 6.5 Mb drop in domestic oil inventories and a 1.7 Mb decline in distillates, but a 3.4 Mb increase in gasoline stocks. Equities retreated as geopolitical tensions between the U.S. and North Korea had investors moving to the sidelines.

THURSDAY 8/10
Natural gas jumped 10.2 cents to $2.985 after the EIA reported a slightly smaller-than-expected 28 Bcf build into storage. Additionally, the surplus compared to the 5-year average narrowed to just 2.0%. Crude oil fell 97 cents to $48.59 after stretching above $50 per barrel during the day’s trade. Stocks lost ground as investor jitters continued to grow amid the escalating tensions between the U.S. and North Korea.

FRIDAY 8/11
Natural gas came up against upside resistance and the fuel dipped 0.2 cents lower to end the week at $2.983. Crude oil seesawed throughout the session before eventually settling 23 cents higher at $48.82. Equity markets traded in a narrow range ahead of the weekend as investors continued to monitor the rising tensions between North Korea and the U.S.

LOOKING AHEAD

Crude traders will continue to monitor supply and demand fundamentals to determine whether the market is moving toward re-balancing. Natural gas will focus on the weather forecast for signs of late-season cooling demand.

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