As an oil price war broke out over the weekend to compound the energy industry’s anxieties over the demand impacts of the coronavirus, natural gas futures also came under significant downward pressure in early trading Monday. The April Nymex contract was down 7.4 cents to $1.634/MMBtu at around 8:35 a.m. ET.

Crude prices had already dropped sharply late last week on reports that the Organization of the Petroleum Exporting Countries (OPEC) and its allies failed to agree on a plan to reduce supply in the face of coronavirus-related demand shocks. Over the weekend that conflict -- principally between Saudi Arabia and Russia -- escalated into a competition for market share, according to analysts.

“Concerns heading into the weekend were that” Russian Energy Minister Alexander Novak’s “comments on countries being free to produce at will starting April 1 would start a fight for market share,” analysts at Tudor, Pickering, Holt & Co. (TPH) said in a note to clients. “Unfortunately, Saudi Arabia appears to be following suit, with official selling prices (OSP) for April shifting significantly lower in key geographies including the U.S., Europe and Asia.

“Following March OSPs, which had been set at premiums to various benchmarks, April prices shifted $5-10/bbl lower depending on the grade and region to healthy discounts instead of premiums -- a grab for market share if we’ve seen one.”

The April West Texas Intermediate contract was down $9.77 to $31.51/bbl at around 8:35 a.m. ET after trading as low as $27.34.

Against this backdrop, natural gas traders appeared to have little interest in the latest weather outlook, which showed a notable increase in demand for the second and third upcoming storage weeks from “transient cool shots” expected later this month, according to EBW Analytics Group.

“The bigger picture, however, has turned even more bearish, with the rapid spread of the coronavirus raising fears of a global recession,” the EBW analysts said. “The growing likelihood of a global pandemic and eruption of a price war in the oil market is sending equities and oil down sharply and could herald a steep drop in industrial demand for natural gas, increasing the downward pressure on Nymex gas despite this morning’s cooler forecast shift.”

Bespoke Weather Services similarly pointed to the broader economic turmoil as the likely impetus behind the latest move lower for natural gas.

“We can analyze both weather and fundamentals all day long, but price action in the natural gas market is simply following the collapse of all global markets today, led by the major collapse in oil prices,” Bespoke said. “...Strictly in terms of data as it stands now, such a price move does not make much sense given that we added weather demand, and daily balance data looks similar to what we saw last week.

“But again, we are simply mirroring the move in other markets, and we do have to consider that possible demand destruction” and risks to U.S. liquefied natural gas exports “are real threats, which the market is pricing in somewhat now.”

April RBOB gasoline was trading at $1.1417/gal at around 8:35 a.m. ET, down about 24.7 cents.