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Natural-gas futures jumped sharply Wednesday morning, bouncing after ending the previous session at the lowest in more than three and a half years after Chesapeake Energy, a major shale producer, cut its production outlook.
Meanwhile, oil futures ticked slightly higher in rangebound trading as investors monitored developments in the Middle East and weighed the outlook for global crude demand.
Price moves
-
West Texas Intermediate crude for April delivery
CL00,
+0.10% CLJ24,
+0.10%
rose 8 cents, or 0.1%, to $77.12 a barrel on the New York Mercantile Exchange. -
April Brent crude
BRN00,
+0.06% BRNJ24,
+0.06% ,
the global benchmark, was up 10 cents, or 0.1%, to $82.44 a barrel on ICE Futures Europe. -
Back on Nymex, March gasoline
RBH24,
+0.27%
rose 0.3% to $2.284 a gallon, while March heating oil
HOH24,
-1.16%
fell 0.9% to $2.706 a gallon. -
March natural gas
NGH24,
+10.22%
jumped 10% to $1.733 per million British thermal units, bouncing after ending Tuesday at the lowest settlement for a front-month contract since June 26, 2020.
Market drivers
In its fourth-quarter earnings report, Chesapeake
CHK,
said its capital plan would support production this year in the range of 2.65 billion to 2.75 billion cubic feet a day, or bcf/d. Chesapeake produced the equivalent of 3.43 bcf/d in fiscal 2023, 98% of which was natural gas.
Chesapeake’s plans helped spark a bounce for natural-gas futures, according to a note from Warren Patterson and Ewa Manthey, strategists at ING.
Natural-gas prices remain down 17% in February alone and have dropped more than 25% so far this year, despite the Wednesday bounce. Natural gas has suffered “on the back of burgeoning domestic natural gas production, above-average storage levels and a warmer-than-normal weather forecast through to the end of February,” Lu Ming Pang, senior analyst at Rystad Energy, said in a note.
See: Natural-gas prices at lowest since 2020 on mild weather, ample supply ‘double whammy’
Analysts said continued attacks on shipping in the Red Sea and the Bab al-Mandab strait by Yemen’s Iran-backed Houthi militants remained a concern. Traders were also tracking efforts toward a cease-fire in the Israel-Hamas war.
The U.S. vetoed an Arab-backed U.N. resolution Tuesday demanding an immediate humanitarian cease-fire in the Israel-Hamas war in Gaza. The Biden administration had said it would veto the resolution because of concerns that it would interfere with efforts to arrange a deal between the warring parties aimed at bringing at least a six-week halt to hostilities and a release of all hostages.
Oil prices traded near the top of a three-week range last week on rising geopolitical worries, but gains were capped after the International Energy Agency left its outlook for demand growth in 2024 unchanged, said Peter Cardillo, chief market economist at Spartan Capital.
“Barring any major geopolitical uprise in the war between Israel and Gaza, we remain neutral on oil prices that we see remaining stuck between the $72-$78 range,” he said.
Associated Press contributed.
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