Daily Market Update March 17, 2020
Early Morning Update
The Apr20 natural gas contract is trading flat to yesterday’s close at $1.81. The Apr20 crude oil contract is down $0.10 at $28.60.
Summary
Yesterday the natural gas prompt settled at $1.815/MMBtu, down over a nickel, while crude oil dipped even lower, settling at $28.70. The 2022, 2024, and 2025 natural gas calendar strips all found fresh all-time lows, as well. To support shale companies, the federal government announced this past weekend they would purchase oil for the Strategic Petroleum Reserve, causing a slight price rally to just sub $32.00 for prompt month crude. However, that price momentum died, as Saudi Arabia and Russia continue to oversupply the market amid low demand due to the COVID-19 crisis. While prompt natural gas prices have remained consistent from yesterday, U.S. demand is down 3.3 Bcf/d at 87.2 Bcf/d, and total demand is down 2.8 Bcf/d at 101.2 Bcf/d day-over-day. Both indicators suggest the market could dip lower despite associated natural gas supply concerns. U.S. dry production is steady at around 92 Bcf/d. The 1 to 5-day weather outlook shows above-normal temperatures across the eastern half of the country, and cooler temperatures creeping in from northern Canada and into the Midwest. This weather pattern continues through the 6 to 20-day outlook.
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