Mike Zaccardi, CFA, CMT

Natural gas: The prompt-month was higher early last week, above $1.70, but then fell steadily to Friday’s July contract expiration. 25-year lows were reached on Thursday and Friday before a little late buying Friday afternoon on light volume led to a settle near $1.50. The week’s low tick was $1.432 – you have to go back to August 1995 to find a price beneath it for the continuous prompt-month. Cash prices were near $1.30-$1.40 at times for next-day spot markets – the lowest since December 1998. Adjust these numbers for inflation, and it’s the equivalent of about $0.75 compared to the mid-1990s – meaning $1.50 today has the same purchasing power at $0.75 then. 

EIA Weekly Natural Gas Storage Report: Last week, the EIA reported a build of 120 Bcf for the week-ending June 19. Consensus was +105 Bcf with a forecast range of 100 to 114. ICE futures trading had indicated an increase of 112 Bcf. The year-ago build was 103 Bcf and the 5-yr average was 87 Bcf. Storage is now 3.012 Tcf, 34% above a year ago and 18% above the 5-yr average. The natural gas seasonal injection running total is +1026 Bcf vs the 5yr avg of +852.

Oil: Oil prices spiked to $41.63 at the high last week, but then eased back to $37 by Thursday and Friday. Inventories are at record levels, but prices continue to hang in there. It’s been a wild ride from negative $40 two months ago to positive $40 today. The entire oil curve is in the upper $30s to low $40s as the market has normalized in a big way. Energy equities have benefited – the best performing sector since the March 23 low in the stock market. In general, the better the economy, the higher oil prices can go – and the lower natural gas prices may fall.

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