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Jonathan Lee Senior Energy Market Intelligence Manager at ENGIE Impact
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Market Commentary | Week Ending 10/11

Natural gas loses its footing amid ongoing oversupply concerns.

Monday 10/7

Natural gas shed 4.9 cents to end the first trading day of the week at $2.303 per MMBtu as milder temperature forecasts weakened the demand outlook. The Nov-2019 WTI crude oil contract edged 6 cents lower to $52.75 per barrel as traders moved to the sidelines ahead of trade talks between the U.S. and China later in the week. Equity markets lost ground, weighed down by shares for consumer-staples companies, as investors eyed Washington for any potential trade developments.

Tuesday 10/8

Natural gas posted another day in the red, its fourteenth out of the last sixteen, as production gains and milder temperatures gave traders little reason to buy into the market. By day’s end, the Nov-2019 NYMEX contract declined 1.5 cents to $2.288. Oil traders remained on the sidelines ahead of the trade talks later in the week and the front-month WTI contract settled 12 cents lower at $52.63. Equities came under pressure after the Commerce Department placed 28 Chinese entities on an export blacklist for alleged human rights violations, a move that threatened to derail trade negotiations.

Wednesday 10/9

Natural gas closed 5.4 cents lower at $2.234 ahead of Thursday’s storage report, which was expected to show a build around 95 Bcf and would compare to the 89 Bcf 5-year average build. Crude dipped 4 cents lower to $52.59 after the EIA reported a 2.9-Million-barrel increase in domestic oil inventories, but a decline in refined products. Stocks rebounded on tepid optimism the U.S. and China would resume trade talks and reach a deal after recent escalations.

Thursday 10/10

Natural gas settled 1.6 cents lower at $2.218 after the EIA reported a slightly larger-than-expected 98 Bcf injection into storage, which put stocks at 3,415 Bcf and trimmed the deficit to the 5-year average to 9 Bcf. Crude bounced 96 cents higher to $53.55 on reports OPEC was considering deeper cuts to output to combat a global supply glut and weakening demand. Equities moved higher on hopes the following day’s meeting between President Trump and Chinese Vice Premier Liu He would lead to a trade breakthrough.

Friday 10/11

Natural gas slid 0.4 cents lower to $2.214, its seventeenth loss in nineteen sessions, as traders continued to digest the prior day’s storage report. Crude advanced $1.15 to $54.70 on reports an Iranian tanker was damaged in an attack near the Saudi Arabian coast. Equities pushed higher after President Trump indicated progress was being made in the trade talks with Vice Premier Liu He.

Looking Ahead

Natural gas will struggle to regain altitude until stronger heating demand arrives or production begins to slow.

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