Daily Market Update August 28, 2017

Early Morning Update

The Sep17 natural gas contract is trading down $0.03 at $2.86.  Oct17 crude is down $0.37 at $47.50.

Summary

On Friday, September natural gas futures ended the trading session down 5.7 cents at $2.892/MMBtu. This is the lowest price the market has seen in about a week, after trading between $2.881 and $2.952/MMBtu. The market’s downward trend is most likely due to persistent bearish fundamentals, such as below-normal weather forecasts, dwindling power burn demand, and expectations for healthy storage injections. Hurricane Harvey, which the National Weather Service referred to as “catastrophic and life-threatening”, is a contributing factor to the market’s bearish view, with the anticipation of weakened industrial demand for natural gas, as plants are shutting their doors during the storm. This could mean a larger-than-expected injection into storage. The U.S. Bureau of Safety and Environmental Enforcement reported that about 25% of oil and natural gas production in the Gulf of Mexico is currently shut down, with an estimated 0.835 Bcf/d of gas production offline. Weather forecasts for the 6-10 and 11-15 day outlooks are calling for below-average temperatures for the majority of the eastern half of the country, pushing cooling demand levels even lower. 

Market Update 082817