Daily Market Update May 28, 2021
Early Morning Update
The Jul ‘21 natural gas contract is trading up $0.06 at $3.02. The Jul ‘21 crude oil contract is up $0.45 at $67.30.
Summary
Happy Friday, everyone! We hope you all get to enjoy a long weekend as the Direct Energy team will also be taking a break from Memorial Day's update next week. Yesterday saw the debut of the July ‘21 contract as the new prompt month, and it kicked off its start with a downward movement, but remained in the previously covered $2.90-$3.00 range. While the morning started out with a moderate change of about a -$0.02, the change was accelerated by the EIA's natural gas storage report. The build came in 8 Bcf above predictions and landed at a relatively high 115 Bcf, when comparing to the 91 Bcf 5-year average injection. This narrowed the deficit that has been plaguing natural gas pricing, which has remained elevated through Q1 of 2022. Along with this short-term softening of the market due to the above-average injection, the market has also seen a slight decrease in power burn demand as cooler weather takes hold. LNG feedgas demand, however, has strengthened and offset the cold weather changes, while year-over-year total supply has decreased by 1.0 Bcf. Though we are moving into a holiday weekend, the market continues to watch upcoming weather patterns, storage levels, and production levels as indications as to where prices may go.
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