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Daily Market Update May 19, 2020

Early Morning Update

The Jun20 natural gas contract is trading up $0.05 at $1.83.  The Jun20 crude oil contract is up $0.88 at $32.70.

Summary

Yesterday, the June prompt gained 13.7 cents from Friday’s settle, closing at $1.783/MMBtu, and climbing higher this morning. Weather-wise, we’re seeing above-normal temperatures, especially in the Northeast and the upper Midwest through the 20-day forecast, while heat in the west picks up in the 6-15 day outlook. After the colder-than-normal temperatures over the last couple of weeks, winter might finally be over. On the supply side, rig counts continue to fall, with shale rigs (horizontal rigs) at their lowest level since 2016. Total production has fallen, as well, hitting a year-to-date low of 85.5 Bcf/d. Demand is showing a moderate increase, as coronavirus restrictions continue to ease across many parts of the country. Will production pick up again, or is this finally the much-anticipated production slowdown that is needed to strengthen prices and bolster investment?

Market Update051920

Market Settles 051820

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