MARKET COMMENTARY | For Week Ending 8/14
Natural gas moderately lower week-over-week on profit-taking.
Natural gas retreated 2.4 cents to $2.959 per MMBtu on profit-taking after the prior week’s run-up even though the weather forecast became more supportive for cooling demand in the East. Crude oil edged $1.23 lower to $47.59 per barrel as traders assessed the global supply and demand balance to determine how close the market was to rebalancing. Equities bounced higher with support from rising technology and financial shares, while geopolitical fears surrounding North Korea took a back seat.
Natural gas inched another 2.4 cents lower to $2.935 as traders prepared for the week’s storage report. Early expectations were for a build in the mid-40s, which would compare to the 5-year average 50 Bcf build. Crude traders looked ahead to the following day’s inventory report for signs of slowing output. The September WTI contract dipped 4 cents lower to $47.55. Stocks fluctuated between positive and negative territory despite the release of better-than-expected retail sales and New York manufacturing data.
Natural gas fell 4.5 cents to $2.890 late in the session as the weather forecast took a bearish turn and called for below-normal temperatures to creep into the Eastern U.S. by month’s end. Crude fell 77 cents to $46.78 even after the Energy Information Administration (EIA) documented a massive 8.9 Mb decline in domestic oil inventories. The large draw was overshadowed by data that showed U.S. production climbed to 9.5 Mb/day, the highest level since 2015. The Dow posted its fourth consecutive day in the green despite a weaker-than-expected reading on housing starts.
Natural gas rebounded 3.9 cents to $2.929 after the EIA reported a 53 Bcf injection into storage. However, reclassifications to working gas dropped the surplus compared to the 5-year average to 1.8%. Oil prices gained 31 cents to settle at $47.09 as traders continued to digest the previous day’s inventory report. Equities plummeted with downside pressure coming from a batch of weaker-than-expected earnings reports from retail and technology companies.
Cooler temperatures were forecast to move into the Northeast by month’s end, which weighed on cooling demand expectations and sent natural gas prices 3.6 cents lower to $2.893. Crude jumped $1.42 to end the week at $48.51. Equity markets landed in negative territory as investors moved to the sidelines following the prior day’s terror attack in Barcelona.
Investors will look ahead to the central bank’s symposium on economic policy in Jackson Hole, Wyoming. Natural gas traders will closely monitor the weather forecast for signs of increased cooling demand.