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Daily Market Update July 8, 2020

Early Morning Update

The Aug20 natural gas contract is trading down $0.05 at $1.83.  The Aug20 crude oil contract is up $0.13 at $40.75. 


Yesterday marked the third day of upward movement for natural gas, as the prompt month contract gained 4.6 cents to close at $1.876/MMBtu. The majority of the climb was in the near-term, as the balance of 2020 moved up 4.5 cents to $2.20, and the 12-month strip gained 3.6 cents to $2.465. Forward calendar strips showed little movement outside of 2021, which inched up 2.6 cents, with 2022 through 2026 remaining relatively flat. Production has been holding steady around the 87 Bcf/d mark, with a slight dip yesterday to 86.4 Bcf/d. Preliminary numbers for yesterday’s production were much lower following Columbia Gas announcing a force majeure event on their MXP line in Kentucky that cut off 2.6 Bcf/d in north-to-south flows, providing bullish pressure on NYMEX. However, the majority of the flows were rerouted to other pipes, with the resulting drop accounting for a much smaller drop of ~0.7 Bcf/d for the day. On the demand side, overall domestic demand is essentially flat day-over-day, with only a minor drop in power burn. LNG feedgas demand continues to remain at a low level, now at 3.1 Bcf/d, a considerable fall from just a couple months ago when it peaked at 9.5 Bcf/d.

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