Natural gas advances on the first storage withdrawal of the season.
The Dec-2022 NYMEX natural gas contract bounced 47.3 cents higher to $6.776 per MMBtu on thin volumes during the holiday-shortened week and after wellhead freeze-offs due to cold temperatures reduced production by 2 Bcf per day. The Dec-2022 WTI crude oil contract closed and expired 35 cents lower at $79.73 per barrel on demand concerns after China strengthened their coronavirus restrictions to combat the recent surge in cases. Equity markets dipped lower as investors turned a bit cautious on reports one railroad union rejected the proposed labor contract.
Natural gas inched 0.3 cents higher to $6.779 even after updated weather forecasts trended a little warmer for the first week of December, which lowered heating demand expectations. The new prompt Jan-2023 WTI crude oil contract climbed 91 cents higher to $80.95 after Saudi Arabia denied reports OPEC was planning to increase output and said the 2 million barrel per day cut would extend through 2023. Equities jumped higher as investors digested a batch of strong corporate earnings releases and positioned ahead of another round released after the bell.
Natural gas settled 52.9 cents higher at $7.308 after the EIA reported an 80 Bcf withdrawal from storage, which widened the deficit compared to the 5-year average to 39 Bcf. Crude oil tumbled $3.01 lower to end the session at $77.94 on reports European Union ambassadors were considering setting a price cap on Russian oil exports between $65 and $70 per barrel. Equity markets pushed higher after new home sales jumped 7.5% during October, while initial jobless claims increased to 240,000.
Markets were closed in observance of Thanksgiving Day.
When trading resumed, natural gas fell 28.4 cents to close at $7.024 as weather forecasts were bearish for heating demand in the major consuming regions for the first week of December. Crude shed $1.66 to settle at $76.28 as traders kept a close eye on China’s response to rising coronavirus cases and the potential impact to oil imports. Equity markets were mostly higher on the day as investors cheered strong consumer spending on Black Friday.
With storage near normal levels, changes in the weather forecast will heavily influence the price of natural gas early in the withdrawal season.
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