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Daily Market Update June 22, 2020

Early Morning Update

The Jul20 natural gas contract is trading up $0.02 at $1.69.  The Jul20 crude oil contract is down $0.40 at $39.35. 

Summary

Each time the market believes global economic reopening is imminent, the weekend headlines are dominated by single-day COVID case records, expansion of cases in many states, and questions whether the first wave ever ended. Nevertheless, last week’s news and uncertainty on both the storage and production fronts continued to weigh heavily, helping to depress NYMEX prices. Long-term NYMEX strips tested the $2.40/MMBtu barrier late in the week, with Cals ‘23 and ‘24 settling below on Friday, and Cal ‘25 knocking on the doorstep at $2.401. What could lead to a price breakout for the longer terms? One factor that bears watching is how residential consumers will react to hot summer temperatures in the face of the pandemic. Forecasted temperatures over the next 20 days look to be above normal across the country, which historically has lead to strong power generation demand, creating a bullish short-term fundamental. What has that meant for short-term power prices? So far, it hasn’t done much, as today’s day-ahead on-peak prices are in the mid-$20/MWh across the PJM footprint. This pattern of low day-ahead index prices looks to be entrenched until the market sees demand pick up from either economic development or extreme temperatures.

Market Update062220

Market Settles 061920

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