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Daily Market Update July 29, 2020

Early Morning Update

The Aug20 natural gas contract is trading down $0.01 at $1.79.  The Sep20 crude oil contract is up $0.41 at $41.45. 

Summary

The NYMEX natural gas prompt month contract gained $0.066/MMBtu yesterday, opening the day at $1.734/MMBtu and closing at $1.800/MMBtu. While the near-term contracts, August through October, continue to follow a weather-induced roller coaster ride supported by power burn demand, longer-terms remained concerned by the lack of drilling activity, such as lower rig counts and drilling permits. Power burn remains strong, which has been bolstered by warm temperatures and high cooling demand. So far, July is up 2.8 Bcf/day versus last year. Northeast drilling permits, on the other hand, saw a 58% drop in Q2-20 vs. Q2-19. The lack of drilling activity has market participants concerned that the balance between supply and demand could tighten and push prices for natural gas even higher. Looking ahead, tomorrow’s storage report from the U.S. Energy Information Administration is expected to show a weekly build that is less than the 5-year average and the smallest injection so far this season.

Market Update072920

Market Settles 072820

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