Market Updates

Daily Market Update - March 8, 2016

Daily market update

Early Morning Update

The Apr16 natural gas contract is trading up $0.03 at $1.72.  The Apr16 crude contract is up $0.20 at $38.10.  

Summary

After falling to a 17-year low last week, prompt month natural gas futures continued their rebound yesterday, gaining 2.4 cents and settling at $1.690/MMBtu, which is still, relatively speaking, an extremely low price.  Healthy production and limited demand have kept prices on a downward trend so far this year, but there is speculation that they may have found their floor.  The extremely low prices we’ve seen lately have forced some producers to cut back their drilling efforts.  According to Baker Hughes, the number of natural gas drilling rigs in operation fell by five last week to 97, the lowest count on record in data going back to July 1987.  In data released by The Energy Information Administration yesterday, natural gas production in the seven key shale-drilling regions is projected to drop from March levels by 450 MMcf/d in April.  One analyst expects a 6% year-over-year drop in natural gas supply by the end of 2016.  However, most market participants believe that the current abundance of natural gas will likely put a cap on price gains for the time being.  After setting all-time lows on Feb. 22 and 25, the 2017-2023 calendar strips have been on an upswing, especially since the announcement of the first LNG cargo exported from the U.S. last week.  Price pressure is mounting in the longer terms due to the expectation of increased LNG exports, as well as growing natural gas exports to Mexico.

Market Update 030816

Market Settles 030716

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