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Daily Market Update May 4, 2020

Early Morning Update

The Jun20 natural gas contract is trading up $0.07 at $1.96.  The Jun20 crude oil contract is down $0.38 at $19.40.

Summary

As states begin to ease social distancing measures and business shutdowns thanks to COVID-19, the economic markets are waiting to see how consumers respond. Will consumers & businesses eagerly return to their pre-COVID spending levels, or will the economy show continued signs of weakness as consumers wait for a vaccine? The energy markets continue to ponder these same questions and have been balancing the likelihood of a U-shaped vs. V-shaped recovery. Regardless of what type of recovery, over the past 30 days, NYMEX and power markets have showed significant strength for the next 18 months. Since April 1st, NYMEX pricing for the  2nd half of 2020 and all of 2021 has risen $0.34 (16%) and $0.27 (11%), respectively, to $2.47 and $2.76. Power markets across the country have followed the same trend, and, in many cases, ATC pricing has risen $2-3/MWh from their all-time lows earlier this year. The market continues to factor how potential production cuts, summer weather, and a potential second wave of the coronavirus will impact the energy markets. These trends will be interesting to follow over the coming months as NYMEX prices continue their climb toward $3.  

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Market Settles 050120

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