MARKET COMMENTARY | For Week Ending 11/10
Natural gas rises as Arctic air descends on the Midwest and Northeast
Natural gas soared 15.0 cents to $3.134 per MMBtu to start the week as forecasts for cooler temperatures across much of the eastern half of the country would likely spur heating demand by late-week. Crude oil jumped $1.71 to a two-year high of $57.35 per barrel amid rising tensions in the Middle East. Over the weekend, five dozen princes, ministers, and businessmen were arrested in Saudi Arabia in a bid to tackle alleged corruption in the country. Equity markets notched small gains in a quiet session as investors monitored progress on tax reform.
Natural gas fluctuated between small gains and losses following Monday’s 5% jump. By day’s end the cost of gas settled 1.8 cents higher at $3.152. Crude oil edged 15 cents lower to $57.20 as traders locked in profits after the commodity reached a two-year high during the prior session. Equities traded in a mixed fashion as a fresh round of corporate earnings failed to impress investors.
Natural gas prices approached upside resistance as traders positioned ahead of the following day’s storage report, which was expected to show a build around 15 Bcf. The December NYMEX contract inched another 2.3 cents higher to close at $3.175. Crude slipped 39 cents to $56.81 after the Energy Information Administration (EIA) reported an unexpected 2.2 Million barrel increase in domestic oil inventories. Stocks struggled to gain altitude with downside pressure coming from lagging bank shares and uncertainty over tax reform.
The EIA revealed a 15 Bcf injection of natural gas into storage, which came in line with the market consensus. Total working gas in storage climbed to 3,790 Bcf. As a result, gas prices closed 2.5 cents higher at $3.200. Crude rebounded 36 cents to $57.17 on concerns escalating tensions in the Middle East could lead to supply disruptions. The Saudi government ordered its citizens out of Lebanon, signaling a potential conflict between Saudi Arabia and Iran. Equities fell as investors expressed disappointment over the potential for the Senate’s tax plan to delay corporate cuts until 2019.
Natural gas extended its winning streak on cold weather expectations and finished the day 1.3 cents higher at $3.213. Crude oil traders gave back prior session gains and the commodity dipped 43 cents lower to $56.74. Equity markets snapped their weekly winning streak on lingering tax reform delay concerns and a consumer-sentiment report miss.
Investors will have a slew of market-moving economic reports to digest mid-week. Natural gas traders will continue to look for cold temperatures to elevate heating demand.