Daily Market Update June 15, 2020
Early Morning Update
The Jul20 natural gas contract is trading flat to Friday’s close at $1.73. The Jul20 crude oil contract is down $1.21 at $35.05.
Summary
As the market prepares for the week, the COVID pandemic continues to be the headline. After seeing a resurgence in positive cases last week in some U.S. states (notably Texas) and in China this morning, equities markets are challenged again, as investors worry that economic reopening may be further delayed around the globe. As the commodity markets continue to monitor the economic rebound, market fundamentals remained stable last week, continuing the trend of low index prices and rangebound forwards. Even when the first heat wave hit the country last week, on-peak day-ahead index prices all remained under $30/MWh in the eastern ISOs. Looking for a wildcard that may push this market out of the current range? Watch production levels – even with some stabilization last week around 87 Bcf/d, the short-term NYMEX forwards all are trading below $2/MMBtu for the next four months. This low-priced and depressed environment may continue to drive drillers away and create an environment where higher prices are needed to bring production back.
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