This past week saw a noticeable outperformance of energy-related shares as measured by the Energy Select Sector SPDR Fund (XLE) compared to the S&P 500.
NATURAL GAS: Natural gas futures clocked in their largest single-day gain in approximately 18 months. September Nymex gas settled Tuesday at $2.193, up 9.2 cents from Monday’s close. October rose 9.5 cents to $2.334. The rally in natural gas has been sparked by the forecast for hot temperatures and an improved outlook for export demand. According to natural gas intelligence firm, NGI, Bespoke Weather Services has not made any changes to its projections, “although the firm noted declines in expected demand from both the American and European models.” “This is simply the market accepting that containment risks are much lower than what was being priced in even as late as last week,” Bespoke said.
CRUDE OIL: Oil futures jumped on Wednesday, holding price amid government data from the Energy Information Administration, confirming a 7.4M barrel drop in U.S. crude inventories. The global benchmark for oil, October Brent crude was up $1.64, or 3.7%, at 46.07 a barrel. The Energy Information Administration noted that gasoline inventories rose 419,000 barrels and distillate supplies increased by 1.6 million barrels.”A much larger fall will all but confirm that U.S. oil production has fallen materially, by possibly millions of barrels a day,” said Jeffrey Halley, senior market analyst at OANDA, according to an earlier Reuters story.
“That could be enough to overcome COVID-19 slowdown fears, and force oil prices higher, and out of their one-month summer doldrums,” he said. PRICE ACTION: Shares of companies in the energy sector that are moving higher include Chevron (CVX), Exxon (XOM), ConocoPhillips (COP), The Williams Companies (WMB), Devon Energy (DVN), EOG Resources (EOG), Marathon (MRO), Noble Energy (NBL), Antero (AM), Western Midstream (WES), and EnLink Midstream (ENLC).