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Daily Market Update August 19, 2020

Early Morning Update

The Sep20 natural gas contract is trading down $0.02 at $2.40.  The Sep20 crude oil contract is down $0.39 at $42.50.

Summary

The upward movement continued during yesterday’s trading session for NYMEX natural gas, with the September prompt month contract gaining 7.8 cents to close at $2.417/MMBtu. The balance of 2020 strip followed closely behind, adding 6.8 cents, while the twelve-month strip moved up 4.4 cents. The calendar strip for 2021 moved up just under three cents to $2.89, the highest it’s been since April 2017, and 2022 closed at $2.63, a gain of 1.5 cents. The longer term strips were flat and remain backwardated from 2021 through 2023. On the fundamentals side, production has held fairly steady at 87.5 Bcf/d for the greater part of the past week, while demand has trended down steadily throughout the week, from 90.7 Bcf/d set last Thursday to today’s projection at 83.9 Bcf/d. The majority of the drop in demand is in the power burn sector, as it has lost over 6.0 Bcf/d over the past seven days. Looking at the weather forecast for the remainder of September, it is not likely we will see strong weather-related demand, as most of the above-average temperatures are staying in the West, and the large demand centers of the Midcon and Northeast look to remain near average.

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Market Settles 081820

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