Daily Market Update August 27, 2018

Early Morning Update

The Sep18 natural gas contract is trading down $0.01 at $2.90.  The Oct18 crude contract is up $0.03 at $68.75.

Summary

On Friday, the September 2018 NYMEX natural gas futures price for the month dipped lower by 4.7  cents on the day to settle at $2.917/MMBtu. The prompt month was rangebound between $2.911/MMBtu and $2.979/MMBtu throughout the day. Weather forecasts over the next couple of weeks have moderated, shrinking the amount of above normal temperatures that were predicted to cover the majority of the country last week. The Northeast, a major natural gas demand center in the U.S., does not appear to be seeing any relief from the warmth until the beginning of September. Along with the bearish weather forecasts, U.S. dry production hit a new record high of 82.8 Bcf/d on Sunday, averaging about 9 Bcf/d higher versus this time last year. Both these factors appear to be keeping a cap on near term pricing, with no success of breaking through the $3.00/MMBtu resistance level. It appears there is the expectation of both weather, driving lower demand for natural gas, and record production going into September that will allow for larger injections into natural gas storage closing the deficit to historical benchmark levels. 

Market Update 082718