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Daily Market Update April 21, 2020

Early Morning Update

The May20 natural gas contract is trading down $0.01 at $1.91.  The May20 crude oil contract is up $36.13 at -$1.50. (not a typo!)

Summary

Oil fell sharply yesterday, prompted by a lack of demand and lack of storage, with the NYMEX WTI for May, the front month, settling below zero for the first time ever, at negative $37.63/bbl, down $55.90 from Friday. Many producers in the U.S. and Canada have already announced production & growth cuts for 2020 due to the low price environment, operating well below break-even costs. In response, NYMEX natural gas increased yesterday, heavily loaded in the prompt and 12-month strips, with May, the prompt month, gaining 17 cents to settle at $1.92, and the 12-month strip gaining 14 cents to settle at $2.53. Jan and Feb 2021 settled just above $3 for the first time since mid-April 2018. On the demand front, Res/Comm showed a 3.0 Bcf/d increase, due to lingering cooler weather in the Midcon and Northeast demand sectors, while industrial demand is showing a decline, down nearly 1.0 Bcf/d compared to this time last year. This drop is not unexpected, as the effects of COVID-19 continue their impact on the economy. On a positive note for the LNG sector, China received its first U.S. LNG shipment in 13 months, after tariff exemptions made the shipment more economical. This is a promising potential avenue for the summer months, as European storage has been filling up due to low demand.

Market Update042120

Market Settles 042020

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