Morning Futures Briefing

Warmer Weather Forecasts Keep Pressure on Natural Gas Prices

The slide continues in natural gas prices, with the lead month March contract trading below $3 per million British thermal units for the first time in 19 months.

Natural gas prices have been in a steep sell-off since mid-December as a relatively mild winter so far in the U.S. and Europe has kept gas inventories ample.

U.S. gas production has been increasing the past two years. The Energy Information Administration (EIA) expects a continued production increase in 2023 to between 100 and 101 billion cubic feet per day, which would be 2% higher than last year.

The latest weather models still call for below-normal temperatures to extend into the northern parts of the U.S. during the first week of February. Some of these models also see the cold front being less aggressive in the eastern and southern sections of the country.

In Thursday’s report, the EIA said there was a natural gas storage draw of 91 billion cubic feet during the week ending January 20. While this was a bigger draw than the expected 82 billion cubic feet, it is well below the five-year, same-week draw average of 185 billion cubic feet.

U.S. natural gas storage levels now total 2.729 trillion cubic feet, which is 4% above last year and 4.9% above the five-year average.  

In overnight trade, March Natural gas futures were trading lower (-2.14%).   

U.S. stock index futures turned lower this morning with the Dow Jones Industrial Average® (-0.05%), S&P 500® (-0.36%), Nasdaq-100® (-0.60%) and the Russell 2000® (-0.26%).

In Asia, the Hang Seng (+0.54%) and the Nikkei (+0.07%) finished higher. The Shanghai was closed for a market holiday.

European trade was mixed by midday with the FTSE (+0.04%), the CAC (-0.22%) and the DAX (-0.01%).

Overnight Futures and Equities moves:

Soybean futures closed higher (+1.40%) after the USDA reported U.S. soybean exports were higher than expected last week. For the week ending January 19, soybean exports totaled 1.27 million tons, above the expected 1.15 to 1.25 million tons.

Gold futures fell on Thursday (-0.66%), as sellers surfaced after the lead month February future traded at its highest levels since April. This week’s better-than-expected Durable Goods Orders and Q4 GDP data sparked a rally in the U.S. dollar and Treasury yields, both of which are headwinds for gold.

Yesterday’s 10-year Treasury note futures closed lower (-0.28%), as yields briefly rose back above 3.50% following a 5.6% rise in December durable goods numbers over expectations for a 2.6% increase.  

Shares of Chevron (CVX) rallied on Thursday (+4.79%) after the energy company announced a $75 billion stock buyback program.

Walmart (WMT) shares closed slightly lower (-0.09%) Thursday after the retailer announced it would open more than 30 Sam’s Club locations in the U.S. starting in 2024.

Chipotle Mexican Grill (CMG) ended yesterday’s session higher (+2.75%) after the company announced it wants to hire 15,000 employees as it plans to double its number of North American stores to 7,000 over the next several years.

What Else to Watch Today:

We end a busy week of economic data with Personal Income and Spending for December, Personal Consumption Expenditures (PCE) for December, Pending Home Sales for December, University of Michigan Consumer Sentiment for January, and the Baker Hughes Rig Count Report

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