Market Updates

Daily Market Update - March 18, 2016

Daily market update

Early Morning Update

The Apr16 natural gas contract is trading down $0.02 at $1.92.  The Apr16 crude contract is up $0.80 at $41.00.

Summary

Yesterday, the U.S. Energy Information Administration reported that natural gas storage inventories declined by 1 Bcf in the week to March 11.  This was only slightly less than the 5 Bcf pull that was anticipated by market watchers, but far below the 88 Bcf withdrawal seen last year for the same week, as well as the 81 Bcf five-year average.  Natural gas inventories now stand at 2,478 Bcf, almost 50% above normal for this time of year.  Bentek Energy is projecting the first injection of the year to be reported next week, followed by a couple more weeks of small withdrawals.  The prompt month fell as much as $0.05 on the news, before climbing throughout the afternoon to settle at $1.936/MMBtu, up 6.8 cents over the previous day’s settle.  Concerns that we may be headed for a hot summer and the accompanying increase in early cooling demand helped fuel the run-up in prices.  Demand in the power generation sector is expected to build as natural gas production is stymied by a falling rig count.  In the week to Mar. 11, the number of natural gas rigs operating in the U.S. was 94, the lowest number ever recorded.  In combination, rising demand and waning production should rebalance the market.  Because of this, the market is looking past the current weak fundamentals of mild weather and natural gas storage levels rivaling the 2012 record season, in anticipation of higher prices in the weeks to com.

Market Update 031816

Market Settles 031716

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