MARKET COMMENTARY | For Week Ending 10/20
Natural gas continues to trade in a narrow range week-over-week.
Natural gas backed away from upside resistance around the 20-day simple moving average as the weather forecast continued to point to weaker heating demand in the coming week. The November NYMEX contract settled 5.4 cents lower at $2.946 per MMBtu. Crude oil climbed 42 cents higher to $51.87 per barrel as traders priced in some risk premium due to rising tensions in the Middle East. Equity markets moved deeper into record territory as investors braced for a week of key corporate earnings report releases.
Natural gas bounced off technical support levels after falling to its lowest level since mid-August during the prior day’s session. The November NYMEX contract climbed 5.8 cents higher to Natural gas rebounded 1.6 cents to $2.962 as traders anticipated the week’s upcoming storage report would come in below last year and the five-year average and widen the current storage deficit. Crude fluctuated throughout the session before eventually closing a penny higher at $51.88. The Dow Jones Industrial Average briefly topped the psychologically significant 23,000 mark for the first time with support from bank and healthcare earnings reports.
Natural gas losses accelerated after traders were unable to hold the majority of the prior session’s intraday gains. By day’s end, the front-month natural gas contract fell 10.8 cents to $2.854. Crude oil moved 16 cents higher to $52.04 after the Energy Information Administration (EIA) documented a 5.7 Million barrel decline in domestic oil inventories. Equities pressed deeper into record territory as the latest round of corporate earnings reports continued to support the market.
Natural gas bounced off lower support levels after the EIA reported a smaller-than-expected 51 Bcf injection into storage. Total working gas in storage climbed to 3,646 Bcf, which was 4.7% below last year and 1.0% below the 5-year average. Crude snapped a four-day winning streak as traders looked to cash in on the recent climb and prices settled 75 cents lower at $51.29. Stocks traded in a mixed fashion on a round of disappointing corporate earnings releases.
Natural gas continued to recover some of the week’s losses and eventually finished the day 4.2 cents higher at $2.915. Crude oil fluctuated between small gains and losses on the November contracts expiration day. The November WTI contract gained 18 cents to close and expire at $51.47. Equity markets soared to fresh records with support coming from tax reform hopes and another batch of upbeat corporate earnings reports.
Natural gas will continue to look for colder weather forecasts to move in to help support the heating demand outlook.