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Jonathan Lee Senior Energy Market Intelligence Manager at ENGIE Impact
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Market Commentary | Week Ending 1/10

Natural gas falls toward the $1-handle for the first time since 2016.

Monday 1/13

The Feb-2020 NYMEX natural gas contract closed 2.0 cents lower at $2.182 per MMBtu even as the weather forecast called for colder temperatures to move into major consuming regions by the weekend. The Feb-2020 WTI crude oil contract lost 96 cents to settle at $58.08 per barrel as traders became more convinced Iran would not attempt to close the Strait of Hormuz or attack oil shipments in the region. Equity markets climbed higher as investors focused on the scheduled signing of the U.S.-China trade deal and the start of fourth quarter earnings season.

Tuesday 1/14

Natural gas inched 0.5 cents higher to $2.187 as updated weather forecasts shifted a bit colder for the Northeast in the coming 6-to- 10-day period. Crude oil gained 15 cents to $58.23 on hopes the upcoming trade-deal would lead to increased demand for the commodity. Equities were mostly higher on the day following a pair of solid bank earnings releases.

Wednesday 1/15

Natural gas fell toward lower support levels ahead of Thursday’s storage report, which was expected to show a draw around 100 Bcf and would likely stretch the surplus to the 5-year average by another 85 Bcf. The front month contract settled 6.7 cents lower at $2.120. Crude lost 42 cents to finish the session at $57.81 after the EIA reported a 2.5 Mb decline in crude inventories, but large increases in gasoline and distillate stocks, which raised concerns over future refinery demand. Stocks pressed higher after investors cheered the signing of the phase-one trade deal by President Trump and Chinese Vice Premier Liu He.

Thursday 1/16

Natural gas slipped 4.3 cents to close at $2.077 after the EIA reported a larger-than-expected 109 Bcf withdrawal from storage, but the draw came in well-below the 5-year average and increased the surplus to 149 Bcf. Oil jumped 71 cents to $58.52 as a pair of U.S. trade deals increased the appetite for the commodity and raised demand expectations. Equities landed in fresh record territory following a batch of upbeat economic reports and after the Senate passed the U.S.-Mexico- Canada trade deal.

Friday 1/17

Natural gas shed another 7.4 cents to end the week at $2.003 as the weather forecast turned bearish for demand following next week’s cold spell. Crude was relatively unchanged and settled 2 cents higher at $58.54. Equity markets continued to push higher after another round of upbeat data boosted investor optimism over the health of the economy.

Looking Ahead

Natural gas prices will struggle to gain altitude unless cold temperatures return for a sustained period of time.

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