Daily Market Update May 14, 2020
Early Morning Update
The Jun20 natural gas contract is trading up $0.03 at $1.65. The Jun20 crude oil contract is up $0.71 at $26.00.
Summary
The Jun '20 prompt month natural gas contract shed a dime yesterday and closed out the day at $1.616/MMBtu. This is the lowest we've seen the Jun '20 contract settle since it debuted as the prompt month, with its highest settlement being $2.13 on Cinco de Mayo. The balance of the year also lost close to a dime, and even Q1 '21 lost four cents, as well. All eyes have been on Q1 '21 lately due to the fears of natural gas production declining right at the peak of heating demand season in the wintertime, which would create bullishness in the market. Luckily, our natural gas storage reserves remain at a steep surplus to last year's and the 5-year average levels. If storage-building continues this upward trajectory throughout the rest of the injection season, we could see levels very close to 4.0 Tcf as we enter winter, which would certainly help to hamper volatility, if we do, indeed, see a large cut in production. This morning, the U.S. Energy Information Administration will release their weekly storage report, where market participants are expecting an estimate around 107 Bcf to be reported. If this actualizes, it would be 22 Bcf larger than the 5-year average.
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