Weekly Energy Market Watch | December 11, 2017

Jonathan Lee

MARKET COMMENTARY | For Week Ending 12/8
Natural gas plummets on rare December storage build.

MONDAY 12/4
Natural gas traded in the red to start the week as early estimates for the upcoming storage report called for an abnormally low draw, which could erase half of the five-year average storage deficit. By day’s end the cost of gas fell 7.6 cents to $2.985 per MMBtu. Crude oil gave back some of the prior week’s gains as traders locked in profits and began to look past OPEC production cut agreement. The January WTI contract closed 89 cents lower at $57.47 per barrel. Equity markets traded in a mixed fashion even as investors cheered the weekend passage of the Senate version of the tax code overhaul.

TUESDAY 12/5
Natural gas lost another 7.1 cents to settle at $2.914 as traders continued to bake in the potential for a single digit draw this week. Crude settled 15 cents higher at $57.62 as traders began to look ahead to following day’s weekly U.S. production data. Equities fell late in the session as rising tech stocks were unable to outweigh growing concerns over the House and Senate’s ability to reconcile their versions of tax reform.

WEDNESDAY 12/6
Natural gas hovered near downside support as traders took positions ahead of the following day’s storage report. The January NYMEX contract inched 0.8 cents higher to $2.922. Crude oil shed $1.66 to end the day at $55.96 after the Energy Information Administration (EIA) documented a 5.6 Mb decline in domestic oil inventories, but a large 6.8 Mb build in gasoline stocks and a 1.7 Mb increase in distillates. Stocks were unable to hold on to early gains as investors continued to take a more cautious stance while monitoring tax reform developments in Washington.

THURSDAY 12/7
Natural gas plummeted 15.9 cents lower to $2.763 after the EIA reported a rare 2 Bcf build to storage, the first December increase in storage levels since 2012. Crude oil managed to recover 73 cents to settle at $56.69 as traders looked to cover short positions. Equity markets landed in positive territory with support coming from rising technology and industrial shares.

FRIDAY 12/8
Natural gas futures were mixed following Thursday’s rout, which was brought on by a surprise build to storage. The January NYMEX contract gained 0.9 cents to end the week at $2.772, nearly 25% below year-ago levels. Oil climbed 67 cents higher to $57.36 after official Chinese data showed oil imports increased to over 9 Million barrels per day during November, up from 7.3 Mb the month prior. Equities launched into record territory after the Labor Department reported a better-than-expected 228,000 jobs were created during the month of November.

LOOKING AHEAD

Natural gas traders will keenly focus on the demand impacts from blasts of Arctic air into the South this week.

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