Natural gas daily recap: April 24

Mike Zaccardi, CFA, CMT

Natural gas prices continued their retreat from mid-week highs near $2.00 in a choppy, yet decidedly negative session on Friday. The prompt-month was quiet in overnight trading Thursday into Friday, but then three waves of selling pressure brought the June contract to below $1.75 by the afternoon. The weekly Baker Hughes rig count revealed another huge drop in production rigs for the prior week and a fresh 4-year low. For natural gas production numbers, the trend continues generally downward. Continental Resources announced they would be halting production in the Bakken – expect similar headlines in the coming months as producers struggle to stay afloat and many wells face prices that are below their costs of production. Demand-wise, the major declines have been on the commercial and industrial arenas, but LNG exports have had down-days as well.

Crude oil rose $0.44 to settle at $16.94 on Friday. Gasoline was higher by $0.0176 to close at $0.6612. Heating oil futures lost $0.0878 to settle at $0.6467. Oil prices continued their rebound from mid-week volatility and negative pricing. It was WTI’s 4th straight day of gains. The new prompt-month June contract ended about 3% higher on Friday, still below $20. The market generally consolidated near-term gains from Thursday morning through Friday afternoon. Analysts are very concerned storage capacity will literally top-out in the coming weeks, yet WTI has rallied off the lows. Oil producer stocks had a stellar week, up about 20%.