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In last week’s market commentary, we mentioned monitoring a potential trend in natural gas futures prices, specifically the pre-weekend bullish wave that tends to come on Fridays. Last Friday, Nov. 22, marked the fourth consecutive Friday that we saw an increase in prompt month prices. The 9.8 cent jump eclipsed each of the three previous increases. It lifted prompt month December 2019 prices back into the mid $2.60’s to finish the week at $2.665, just over 2 cents lower than the previous Friday.
Trading throughout the entirety of last week followed a very similar pattern to the week prior. An extremely bearish Monday was followed by another move lower on Tuesday before the market rebounded towards the end of the week. Last week’s Monday/Tuesday sell-off amounted to 17.8 cents and was then followed by a 15.5 cent increase over the remaining three days. The prior week featured a 16.8 cent Monday/Tuesday sell-off followed by a 6.7 cent increase throughout the rest of the week.
Surprisingly, last Thursday was the quietest day in terms of net movement even though it featured the second largest withdrawal ever for that week. The 94 BCF withdrawal was about 7 BCF higher than expected but paled in comparison to the 109 BCF withdrawal for the same week in 2018. While the market surged a few pennies following the report’s release, the prompt month finished the day up less than a penny. Perhaps traders elected to look past the current inventory report with an eye to the future, as the next few reports are all expected to be on the bearish side.
The week of Thanksgiving is always very interesting to watch. While many start vacations early, the market has a lot of important milestones that occur throughout the week. Tuesday marks the expiration for the December 2019 contract and the inventory report comes at noon on Wednesday as a part of a special release ahead of the holiday. With many leaving the office early on Wednesday, a surprise report could leave the market susceptible to a major move (up or down) in a thinly traded market. That same risk remains on Black Friday, which is technically a trading day even though many of us are eating, shopping or watching more football.
Download a PDF version of this week’s Market Commentary.