Daily Market Update December 06, 2021
Early Morning Update
he Jan ‘21 natural gas contract is trading down $0.40 at $3.73. The Jan ‘21 crude oil contract is up $2.04 at $68.30.
Summary
ast week, the news market was on warp speed as the energy markets dissected a number of contradictory economic stories. The main newsmaker continues to be the pandemic and the spread of the Omicron variant across both the U.S. and the globe.With daily U.S. COVID cases still hovering around 86,000 (99% of which are Delta), the new variant has created more uncertainty on what the next steps could be with the pandemic.On the good side, a strong November jobs report was released showing the unemployment rate fell to 4.2%, the lowest level since before the pandemic.In equity markets, the bears won out and the S&P, DOW, and NASDAQ all reacted with a sharp 3-5% downturn over the past three weeks as economists struggle to understand how the new variant may already hurt struggling supply chains and continued slowness in labor participation growth.With this uncertainty in play, the energy markets have followed the downward trend as crude oil has dropped from its late October high of $82 to now $68/barrel, and natural gas prices have also taken a steep drop, with Cal ‘22 pricing down to under $4/Dth for the first time since late September. What could reverse this sharp trend in the energy markets? With winter bearing down upon us, it will be interesting to see how the first sign of below-normal temperatures may affect futures prices.
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