Weekly Energy Market Watch

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Jonathan Lee Senior Energy Market Intelligence Manager at ENGIE Impact
Energy Market
Natural Gas
Energy Prices

Market Commentary | Week Ending 10/8/2021

Natural gas loses ground following a large storage build.

Monday 10/4

The Nov-2021 NYMEX natural gas contract climbed 14.7 cents higher to $5.766 per MMBtu despite a bearish domestic weather forecast as the market continued to take its cue from volatile European prices. The Nov-2021 WTI crude oil contract jumped $1.74 higher to $77.62 per barrel after OPEC opted against opening the production floodgates and decided to gradually increase output by 400,000 barrels each month until they reached pre-pandemic levels. Equity markets retreated as rising bond yields weighed on tech stocks and on concerns over the debt ceiling debate in Washington.

Tuesday 10/5

Natural gas soared 54.6 cents higher to $6.312 on heightened market speculation even though early estimates for the week’s storage report centered around a triple digit build. Crude advanced another $1.31 to $78.93 after OPEC resisted calls to quickly ramp up output and maintained its disciplined approach to production quotas. Equities rebounded with support from rising energy shares and positive monthly growth from the services sector.

Wednesday 10/6

Natural gas tumbled 63.7 cents lower to $5.675 ahead of Thursday’s storage report, which was expected to show a triple-digit build that would narrow the deficit to the 5-year average by at least 20 Bcf. Oil prices fell $1.50 lower at $77.43 after the EIA reported a 2.3-Million-barrel build in oil inventories. Stocks pressed higher on growing concerns over the constrained supply chain and the economic recovery.

Thursday 10/7

Natural gas inched 0.2 cents higher to $5.677 even after the EIA reported a solid 118 Bcf injection into storage, which cut into the deficit to the 5-year average by 37 Bcf to a less concerning 176 Bcf. Crude closed 87 cents higher at $78.30 after the U.S. Energy Department said it had no plans to tap the Strategic Oil Reserve to blunt the recent rise in prices. Equities traded in the green after the U.S. Senate reached a deal to extend the debt ceiling through early December.

Friday 10/8

Natural gas settled 11.2 cents lower at $5.565 following the prior day’s strong storage injection and on a decidedly bearish weather forecast for early season heating demand. Crude pushed $1.05 higher to $79.35 on expectations of stronger demand this winter with the potential for increased gas-to-oil switching to generate power in the northern hemisphere. Stocks were mixed on the day after the Labor Department reported a weaker-than-expected 194,000 jobs were created in September.

Looking Ahead

Natural gas is likely to continue to experience volatile daily swings as pre-winter storage levels come into focus.

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