Weekly Energy Market Watch
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Jonathan Lee
Senior Energy Market Intelligence Manager at ENGIE Impact
Energy Market
Natural Gas
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Natural gas dives lower following larger-than-expected storage build.
The July-2020 NYMEX natural gas contract edged 0.5 cents lower to $1.664 per MMBtu after making a failed intraday attempt to push above strong upside technical resistance. The July-2020 WTI crude oil contract gained 71 cents to close and expire at $40.46 per barrel as an uptick in economic activity around the world suggested a coming increase in demand. Equity markets pushed higher, led by technology-related shares, as investors continued to weigh the potential of a quick economic recovery.
Natural gas declined 2.7 cents to $1.637 after weather models turned slightly cooler overnight, reducing the amount of cooling degree days forecast for the coming week. The new prompt August-2020 WTI crude contract gave up early session gains before eventually settling 36 cents lower at $40.37. Equities climbed higher after the day’s batch of economic data showed improvements in both the manufacturing sector and new home sales.
Natural gas slid 4.0 cents to $1.597 ahead of the following day’s storage report, which was expected to show a triple-digit build that would compare to last year’s 103 Bcf injection and the 5-year average 73 Bcf injection. Crude fell $2.36 to $38.01 on coronavirus concerns and after the EIA reported a 1.4-Million-barrel increase in domestic oil inventories. Stocks plummeted lower on economic concerns after the 7-day average of coronavirus cases increased by 30% over last week.
Natural gas plunged 11.5 cents lower to $1.482 after the EIA reported a much larger-thanexpected 120 Bcf injection into storage, which put working gas in underground storage at 3,012 Bcf and widened the deficit to the 5-year average to 466 Bcf. Equity markets recovered some of the prior day’s losses as bank stocks rallied after the FDIC voted to ease some post-financial crisis requirements. Crude tracked higher with equities and closed 71 cents higher at $38.72.
The July-2020 NYMEX natural gas contract rebounded 1.3 cents to close and expire at $1.495 as traders covered short positions following Thursday’s big drop. Equities experienced steep losses as increasing coronavirus cases caused some states to re-close areas of their economies. Crude shed 23 cents to end the week at $38.49 as states rolling back some economic openings threatened to reverse the recent increase in demand.
Natural gas traders will closely follow supply and demand fundamentals to gauge future storage injections.
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