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Daily Market Update May 7, 2020

Early Morning Update

The Jun20 natural gas contract is trading up $0.03 at $1.97.  The Jun20 crude oil contract is up $2.31 at $26.30.

Summary

After settling at a four-month high of $2.13 on Tuesday, the June contract pulled back 19 cents yesterday and settled at $1.94/MMBtu. The Q3 and Q4 strips for 2020 both weakened as well, respectively falling nearly 13 cents and 9 cents. This slip in prices may be related to eased supply concerns, as northeast production has recovered to pre-TETCO explosion levels. Additionally, while eastern temperatures for the next few days are quite cold and bullish, heating demand is expected to weaken during May's much warmer second half. Given the country’s domestic storage health, the market also seems to be growing more comfortable with any coming production slowdowns. U.S. stockpiles are currently at a 55% surplus to last year and a 20% surplus to the five-year average. Today's storage report by the U.S. Energy Information Administration is expected to increase this surplus significantly, as the predicted injection range is between 101 and 114, with a consensus at 111 Bcf. This range well outpaces the 74 Bcf average build over the last five years.

Market Update050720

Market Settles 050620

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