Market Updates

Daily Market Update - June 6, 2016

Daily market update

Early Morning Update

The Jul16 natural gas contract is trading up $0.03 at $2.43.  The Jul16 crude contract is up $0.93 at $49.55.

Summary

The number of rigs drilling for natural gas dropped by five in the week to June 3, setting a new record low.  The natural gas rig count stands at 82, down 140 from the same time last year, and 274 rigs less than the 356 peak seen in November 2014.  Despite this, prompt month natural gas futures closed the last trading session before the weekend slightly lower than Thursday, settling at $2.398/MMBtu, for a loss of 0.7 cent on the day.  This followed four straight sessions of gains, which saw Jul16 natural gas futures rally more than 25 cents (12%).  Last week’s rally came amid a tightening supply-demand balance, as U.S. dry production declined and near-term weather forecasts turned warmer.  Production averaged just 70.7 Bcf/d over the last two weeks, and were the first consecutive weeks below 71 Bcf/d since early January.  With the exceptions of the Northeast and the Northwest, almost the entire U.S. is expected to be warmer than normal for the next two weeks.  Additionally, demand for natural gas in the power generation sector was up last week, averaging 29 Bcf/d, and is projected to remain relatively high for the next several weeks as we head into summer.  Exports have also been strong, with pipeline exports to Mexico near 3.6 Bcf/d and feedgas demand for LNG averaging close to 0.6 Bcf/d over the past four weeks.

Market Update 060616

Market Settles 060316

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