Mike Zaccardi, CFA, CMT

- Natural gas futures rose $0.02, +1.2%, to settle at $1.73 on Friday

- Cash fell again and likely weighed on the prompt; Cal 21 and beyond were mixed

- On the chart, support is near $1.50 while $1.97 is resistance

Natural gas prices ranged from $1.68 to $1.76 on Friday ahead of the holiday weekend. At the end of the day, the settle was not far from Thursday’s close. The Baker Hughes rig count revealed a drop in oil rigs to the lowest level since 2009 while natural gas directed rigs were unchanged. The energy markets have calmed somewhat in the last few weeks as oil prices have stabilized in the $30s and natural gas prices have continued to range from the $1.50s to near $2.00. What’s interesting is changes in the forward curve over the last year – the June 2020 contract, set to expire later this week, is down nearly 30% from a year ago while June 2021 is flat. Go further out on the curve however, and June 2028 is also down 30%. The market is concerned about supply & demand tightness for 2021, but is rather un-phased for other years. So like many financial markets, it’s all about your timeframe.

- Cash prices at Henry Hub cleared at $1.64/MMBtu (-$0.045) for Gas Day 23-26
- ICE weekly futures suggest a build of 105 Bcf on May 28 and 113 Bcf on June 4. Fall 2020 futures put storage at 3.9 Tcf on November 12 (5-year average: 3.68 Tcf, 2019: 3.73 Tcf).

Crude oil fell $0.67 to settle at $33.25 on Friday. Gasoline was lower by $0.0069 to close at $1.0382. Heating oil futures lost $0.007 to settle at $0.982. Oil prices drifted lower to wrap up the week despite the fewest active rigs noted by Baker Hughes since July 2009 (237). The record-high is 1,609 operating rigs from October 2014. WTI actually rallied sharply from the overnight session Thursday when the July contract dropped below $31, but the bulls could not make it a 7 straight positive session. US-China trade talk tensions reared their head once again, shades of 2019. Something for the bulls to ponder – what will happen with all of the oil stored in tankers offshore now that the contango in the WTI term structure is gone?