October natural gas futures rolled to November at an over 60 cents per MMBtu contango. Contango is a forward premium in a futures market. The steep level of contango between the two contracts reflected the natural gas market’s seasonality as the October contract represents the injection season where stockpiles build. The November contract reflects the beginning of the withdrawal season during the peak time of the year for natural gas demand.
Natural gas stockpiles rise from March through November and fall from November through March each year. Meanwhile, 2020 is no ordinary year in natural gas and markets across all asset classes. The November 3 election will determine the President for the next four years and the majorities in the House of Representatives and the US Senate. One of the many issues facing voters when they go to the polls is the future of US energy production. Over the past years, technological advances in fracking and fewer regulations made the United States the world’s leading natural gas and crude oil producer. The Trump administration supports US energy independence; the Democrats favor alternative energy sources that reduce the carbon footprint. Therefore, the election presents a unique dynamic for the energy markets, which could cause increased volatility over the coming weeks, months, and perhaps years.
As natural gas moves towards the peak season of demand facing bullish and bearish factors. We should expect lots of price variance in the volatile natural gas futures market over the coming weeks.
Another storm in the gulf causes a lower high
Hurricane Delta was steaming towards the US Gulf Coast on Friday, October 9, as a Category 3 storm with life-threatening storm surge, damaging winds, and rainfall flooding from Louisiana and east Texas to Mississippi. The hurricane will hit the same areas ravaged by Hurricane Laura