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Daily Market Update September 3, 2020

Early Morning Update

The Oct20 natural gas contract is trading up $0.02 at $2.51.  The Oct20 crude oil contract is down $0.71 at $40.80. 

Summary

The October NYMEX natural gas contract closed out yesterday's trading session at $2.486/MMBtu, down four cents from the prior day's close. The prompt month was the only near-term month to experience a loss, as all other months in the 12-month strip gained two cents on average. Similarly, the 2021 calendar strip also increased by two cents, but, beyond that, future calendar strips remained basically flat day-over-day. Over the past few weeks, we've seen Q1 '21 strengthen, as the market anticipates natural gas demand to continue growing, particularly for LNG exports and exports to Mexico. This growth coincides perfectly with the winter season and could be cause for concern if we don't see an improvement to our currently waning natural gas production levels. Later on today, the U.S. Energy Information Administration will release their natural gas storage report for the week ending August 28. Market analysts are expecting an injection of around 36 Bcf to be reported, which is about half of the 5-year average benchmark. Looking ahead, the total of the next two storage estimates are also predicted to be lower than the 5-year average by approximately 43 Bcf.

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