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Daily Market Update August 31, 2021

Early Morning Update

The Oct ‘21 natural gas contract is trading down $0.05 at $4.26. The Oct ‘21 crude oil contract is down $0.71 at $68.50.

Summary

The NYMEX natural gas prompt month moved down yesterday, dropping $0.083 to settle at $4.305/MMBtu. This downward movement came as a bit of a correction after a huge market runup last Thursday and Friday. So why did the market run up? There are several factors that contributed: September contract expiration, extended heat throughout the eastern half of the U.S., an anemic storage report, and the landfall of Hurricane Ida. Contract expiration does not always result in a price run-up, but has become commonplace over the last couple of months as near-term volatility increases near the expiration date for natural gas contracts. As for the heat, many ISO’s had alerts for peak demand last week and very high power burn rates. Finally, Hurricane Ida made landfall in Louisiana, a state with major impacts on the national natural gas infrastructure, from production to transmission to exportation. Many offshore rigs had been evacuated, clipping production and further tightening the supply/demand balance. Flooding and destruction have caused catastrophic damage to electric transmission lines, ergo pushing prices up. It must be stated that the hurricane’s impact is still being assessed, and even the Mayor of New Orleans has come out saying that they expect the death toll to rise.

 

Market Update 08 31 2021

Market Settles 08 30 2021

 

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