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Daily Market Update May 31, 2019

Early Morning Update

The Jul19 natural gas contract is trading up $0.03 at $2.57.  The Jul19 crude oil contract is down $1.18 at $55.41. 

 

Summary

The EIA surprised the market by reporting a build of 114 Bcf today, well above market estimates.  The build further pressured a gas market that has been dragging near multi-year lows.  Whether this provides the impetus for sustained trading below $2.50 is yet to be seen, but it definitely increases the odds of healthy storage as we look towards next winter.  The (now prompt) July NG contract fell $0.077 to $2.547 on the day.  Power markets also fell as index markets have been clearing in the gutter, providing little reason for moving higher.  Support levels in many power markets are being tested as fundamentals remain weak (mild weather, low demand leading to compressed heat rates).  I was reminded recently that the market is often at its lowest when the fundamentals are the most bearish.  Can it get more bearish?  I guess we’ll see, but it’s pretty weak right now and opportunities exist.

 

Market Update 053119

Market Settles 053019

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