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Daily Market Update August 6, 2020

Early Morning Update

The Sep20 natural gas contract is trading up $0.04 at $2.23.  The Sep20 crude oil contract is up $0.11 at $42.30. 


The recent rally in natural gas may be fizzling out, at least when we look at yesterday's trading session, as the Sep ’20 contract saw negligible change from the previous day. The prompt month settled at $2.191, and the remainder of 2020 experienced just a penny increase, on average. Similarly, calendar strips '21-'23 remained basically flat day-over-day. Weather forecasts continue to show most of the country at normal temperatures to round out this week, with the exception of the western half of Texas experiencing above-normal temperatures. Looking ahead to next week, broad heat from the Plains to the Northeast is expected to return and stick around until late August. We've recently seen a dip in natural gas power burn demand, thanks to the reprieve from hot temperatures in the predominantly natural gas-heavy regions of the Northeast and Midcon. While the market has been surprised by the sharp rally in the near-term, it's important to remember that under normal, non-COVID-19 conditions, the rally could have had a much larger impact on prices. This morning, the EIA will release their weekly storage report, where market participants are expecting a 30 Bcf injection to be reported, which trails the 5-year average by just three Bcf.

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