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Energy Market Watch: Thanksgiving Edition

Contributed By: Robbie Fraser, Commodity Analyst | Schneider Electric Energy & Sustainability Services

The November Markets Watch is a veritable cornucopia of storage reports, election implications, Fed decisions and gas prices. You know, the usual. So, take a moment to review all of the goings-on before your weird great aunt arrives at the Thanksgiving table with that gray casserole everyone pretends to enjoy. There’s just so much celery in there. Why does everything need celery?

November 8, 15, 21 & 29 – Natural Gas Storage Reports

Ultimately, the ups and downs of natural gas storage – driven by the difference between daily supply and demand – are at the core of long-term price movements for U.S. natural gas. November typically sees a heavy dose of weekly gas withdrawals as cooler weather increases heating demand, but this year things aren’t so clear. With forecast models calling for mild weather through at least the first half of the month, natural gas stocks are likely to rise during stretches where they’ve typically dropped in previous years. If that holds true, it would likely mean some added price pressure for the US natural gas market.  That would also carry over to power markets in many cases, where natural gas often serves as the marginal fuel source.

November 6 – Election Day (U.S.)

Elections matter, but this round isn’t likely to bring too many earth-shattering energy policy changes at the federal level. Instead, early expectations show an increased likelihood of gridlock with Democrats potentially taking control of the House while Republicans maintain the senate (and white house).

Nonetheless, there are two significant ballot measures worth watching at the state level:

The results of those measures are less than certain – and the potential impact is high – so energy markets are sure to pay close attention.

November 8 – Federal Reserve Decision

Rate decisions are no stranger to our monthly market watch series and, on the surface, this latest round of Fed meetings may seem less important than most. According to current market estimates, it’s highly unlikely the Fed will change interest rates at its November meeting. However, the meeting – and accompanying press conference –  comes as the Fed faces some serious scrutiny from President Trump.

For all the complications of modern monetary policy, the tension between President Trump and current Fed Chair Jerome Powell is relatively simple. Trump likes low interest rates. Powell keeps raising them. While the Fed isn’t likely to act in November, they are expected to push another rate before the end of the year. For that reason, the market will pay close attention this month. And, as a result, dollar-denominated energy commodities like crude and coal should see a bit of added volatility to wrap up the year.

November 22 – Thanksgiving (U.S.)

Sure, Thanksgiving isn’t primarily about energy. It’s about stuffing your turkey and your face. But, while you’re analyzing whether that second piece of pumpkin pie is a good decision (it’s not, but go for it anyway), oil traders will be crunching the numbers on just how busy this busy travel season really is. While everyone knows gasoline demand goes up during the holidays, the exact jump depends on the weather, unemployment levels and gas prices among other factors.

Heading into November, gas prices are tumbling after steadily rising for most of the year. In many states, that’s enough to pull gas below the key $3/gallon level, which tends to encourage more families to take that holiday road trip. More demand ultimately means prices turning higher (in case you needed one more reason to dislike heavy holiday traffic).

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