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Daily Market Update April 16, 2020

Early Morning Update

The May20 natural gas contract is trading flat to yesterday’s close at $1.60.  The May20 crude oil contract is up $0.33 at $20.20. 

Summary

Despite forecasts for below-average temperatures for much of the U.S., particularly in the Midcon and Midwest regions throughout this week, the prompt month weakened yesterday. The NYMEX natural gas prompt month contract lost over a nickel during yesterday's trading session and closed the day at $1.598/MMBtu. This loss is most likely due to declining demand - power burn fell 1.5 Bcf/d yesterday, and residential/commercial heating demand is down 5.8 Bcf/d year-over-year. Concerns are growing in the market that, while our natural gas storage numbers are very strong right now, that level could be quickly erased depending on when demand rebounds from the coronavirus and how production responds to the current low-price environment. If the demand rebound aligns with the projected decline in production and the start of winter, we could see a strong reaction in NYMEX pricing, along with the need to pull more gas from storage. Speaking of, the EIA will release their weekly storage report this morning, where market analysts are expecting a 67 Bcf injection to be reported. If this actualizes, it would be 6 Bcf lower than last year, but 40 Bcf higher than the 5-year average benchmark.

Market Update041620

Market Settles 041520

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