Daily Market Update March 19, 2020
Early Morning Update
The Apr20 natural gas contract is up $0.03 at $1.63. The Apr20 crude oil contract is up $1.73 at $22.10.
Summary
The prompt month took a plunge yesterday and closed out the day at a new all-time low of $1.604/MMBtu. This is $0.125 lower than the previous trading day and $1.245 lower than the prompt month this time last year. Almost all of the movement was felt at the front of the curve, with Cal '21 losing 2.4 cents and Cal '22 losing 1.3 cents. Further out on the curve, the calendar strips remained pretty much flat day-over-day. This incredibly low-priced environment continues, as we are seeing sub $2 gas through September of this year. Between the anticipated demand destruction due to the Covid-19 outbreak and the massive drop in crude oil prices, the market is desperately searching for some kind of direction during such an uncertain time. There are a lot of unknowns at this point that could quickly shift the market - What long-term impact will this have on demand? Will producers significantly slow down production? How long will all of this last? One thing that has remained constant is our healthy natural gas storage numbers. Later on today, the EIA will release their weekly storage report, where market participants are expecting a very bearish withdrawal of only about 4 Bcf. If this actualizes, it would be 87 Bcf smaller than last year and 59 Bcf smaller than the 5-year average benchmark.
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