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Daily Market Update June 16, 2020

Early Morning Update

The Jul20 natural gas contract is trading down $0.01 at $1.66.  The Jul20 crude oil contract is up $1.23 at $38.35.

Summary

The July 2020 NYMEX prompt month slid 6.2 cents yesterday to close at $1.669/MMBtu. August through October saw similar drops and remain below $2 for now. The 12-month strip lost 3.6 cents, down to $2.366, and the 2021 calendar strip lost a little over two cents, with the loss weighted on the front end through July 2021. These price drops reflect an over-supplied natural gas market, as overall demand continues to look for stability amid coronavirus uncertainty. While production has been steady at just over 86 Bcf/d for the last few weeks, domestic industrial demand remains weak, and LNG exports, which are only now starting to pick back up, hade dropped to below 4.0 Bcf/d, as numerous export cargoes were cancelled due to worldwide demand destruction. But there is some strength propping up the demand sector, as well - power burn continues to be strong, as natural gas-fired generators avail themselves of the low gas prices to generate electricity, and U.S. gas pipeline exports to Mexico hit a record day last week due to a combination of warmer weather and signs of economic reopening in Mexico.

Market Update061620

Market Settles 061520

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