Daily Market Update September 6, 2016
Sep 06, 2016
Early Morning UpdateThe Oct16 natural gas contract is trading down $0.04 at $2.75. The Oct16 crude contract is down $0.24 at $44.20.
Ahead of the holiday weekend, cooler weather forecasts helped keep the Oct16 natural gas futures contract literally unchanged from the previous day. The prompt month closed the week without any change from Thursday, settling at $2.792/MMBtu. The latest weather forecasts from the National Weather Service show increasing areas of cooler-than-normal temperatures, while the regions of above-average temperatures covering the eastern U.S. were reduced. Together with Tropical Storm Hermine moving up the East Coast, demand for natural gas, especially in the power burn sector, is expected to be reduced. Hermine was downgraded from hurricane status on Friday, and now poses little threat to the mainland U.S. as it makes its way northeast into the Atlantic. Total U.S. dry production is up 0.1 Bcf/d from the weekend at 71.9 Bcf/d. Total demand for natural gas is up 2.3 Bcf/d today from the holiday weekend, but is still down 1.0 Bcf/d from Friday’s levels. Power burn made the biggest move over the weekend, averaging 26.1 Bcf/d Saturday through Monday, down 2.7 Bcf/d from where it was on Friday. For the week to September 1, U.S. wind generation was down significantly from the previous week, averaging 230.3 Gwh/d, a 53% decline. The week’s output was also much lower than the previous 30-day average, indicating a summer lull before wind speeds pick up again in the fall.