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Daily Market Update August 17, 2020

Early Morning Update

The Sep20 natural gas contract is trading flat to Friday’s close at $2.36.  The Sep20 crude oil contract is up $0.14 at $42.15.

Summary

The volatility in the natural gas market continued on Friday, as the Sep ‘20 NYMEX futures price surged 17.4 cents on the day to settle at $2.356/MMBtu, about 58 cents higher than last month. This is now the highest prompt month settlement price since December of last year and caught the market off guard. Rig counts continue to fall, down three rigs week-over-week and bringing the total number down to 244, according to Baker Hughes’s weekly report. Demand continues to increase, with LNG and exports to Mexico both rising last week, with LNG reaching as high as 4.8 Bcf/d. In the 1-5 day weather forecast, most of the eastern half of the country will be at normal to slightly cooler-than-normal temps, with the majority of the significant heat trapped on the West Coast and remaining there through the end of the month. In the 16-20 day forecast, the heat flips and moves back into the Northeast to start September. U.S. dry production is hovering just over 87.5 Bcf/d, up slightly versus last month. If rig counts continue to fall, using up some of the DUC (drilled, but uncompleted) well stocks could be concerning as we see demand pick up with the approaching winter and into 2021.  

Market Update081720

Market Settles 081420

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