Daily Market Update November 5, 2020
Early Morning Update
The Dec20 natural gas contract is trading up $0.03 at $3.07. The Dec20 crude oil contract is down $0.08 at $39.07.
Summary
Bearish demand forecasts via warming temperatures in the Northeast once again drove yesterday’s slight-but-broad selloff in the natural gas market. While most of the country east of the Rockies is expected to be warmer-than-normal for the majority of November, the current temperature outlook for the Northeast has changed most-significantly since the beginning of the month. Northeast temperature models have warmed 2 degrees through the 8th and 6 degrees through the subsequent week. These upward revisions have caused the expectation for res-comm demand to decrease by an estimated 13bcf/d in the region. As a result, Henry Hub futures from the December 2020 prompt contract through the November 2023 contract each lost at least a penny by the end of yesterday’s trading session. The largest movement was concentrated within the 12month strip, which weakened $0.015.MMBtu and settled at $3.00/MMBtu. Estimates for today’s potentially bullish storage report fall within the range of --10 Bcf to – 38 Bcf withdrawals, directionally opposite from the five year average injection of +52 Bcf.
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