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Daily Market Update March 5, 2021

Early Morning Update

The Apr21 natural gas contract is trading down $0.02 at $2.72. The Apr21 crude oil contract is up $1.77 at $65.60.

Summary

The EIA announced a 98Bcf withdrawal, leaving market analysts incredulous as market forecasts ranged anywhere from 134Bcf all the way up to 158Bcf. This massive error arose primarily from the South Central inventories where there was no net change compared to the predicted 28Bcf reduction. This disconnection between the EIA and the market is one of the largest (if not the largest) difference between forecasts and reality. Typically, the market would see a much larger reaction when the forecast is far off, but it seems the direction was beneficial for the overall health of the market. It appears that the market had mostly factored in a larger withdrawal as it was forecasted earlier on, but as the forecasted number fell weekly, the actualized number became much more palatable. The fact that the withdrawal was smaller was good for the buyers’ market as it helped lower prices even further after the upward movement seen two weeks ago. The immediate market reaction was a $0.10/MMBtu drop in the natural gas index, but eventually contracted back to only falling $0.07/MMBtu and settling at $2.746/MMBtu yesterday evening.

 

Market Update 03 05 2021

Market Settles 03 04 2021

 

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