Daily Market Update April 28, 2020

Early Morning Update

The May20 natural gas contract is trading up $0.04 at $1.86.  The Jun20 crude oil contract is down $0.48 at $12.30. 

Summary

Yesterday, May 2020 natural gas settled at $1.819, up $0.073 from Friday. June 2020 crude also settled higher at $16.84, rallying $4.44 from the previous day. Available crude storage is practically non-existent as tankers are even being used off the coast of Singapore to support the oil glut. OPEC cuts are scheduled to begin this week, but some producers may begin cutting supply early with lack of demand. Today marks the expiration of May 2020 natural gas, and some volatility in the near term is expected. We saw a 1.8 Bcf/d decrease day-over-day in U.S. natural gas demand to 67.2 Bcf/d. The demand decrease is largely due to Res/Comm falling 3.0 Bcf/d day-over-day to 19.5 Bcf/d. As we continue further into the shoulder season, the market is expecting less heating demand, despite slightly cooler-than-normal temperatures forecast across the Northeast and into the MidCon in the 20-day outlook. These temperatures are being offset by warmer-than-normal temperatures across the West and stretching through the middle of the country. Long-term natural gas strips are still backwardated, with Cal ’21 as the most expensive, rallying today to $2.739, and Cal ’24 as the least expensive, at $2.438.

Market Update042820