Natural gas recap: April 22

Mike Zaccardi, CFA, CMT

Natural gas prices jumped more than 11 cents as declining production outweighs the likelihood of falling LNG demand. Gains were focused on the front of the curve with the back-half of 2020 up just 3 cents. January 2021 again notched a fresh 2-year high. Sub-$2 natural gas could be a thing of the past once the June contract takes over for May; June is $2.03 and the rest of the curve is more expensive through January. The market will turn its eyes to Thursday’s storage report that should show a smaller than average build due to widespread colder than normal temperatures across the nation last week.

Crude oil rose $2.21 to settle at $13.78 on Wednesday. Gasoline was higher by $0.1281 to close at $0.6384. Heating oil futures rose $0.0042 to settle at $0.7311. Oil prices surged across the curve today as the market bounced back from a tumultuous Monday & Tuesday. The new prompt-month June contract climbed more than 20%, but that just means WTI is $14. July through December averages about $25, below many shale wells’ operating breakeven price. The EIA reported a generally in-line with expectations inventory report, which was another massive build in stocks, not surprisingly.