NGAS Futures Touch Lowest Level In 3 Months, Cotton Touching April Lows, US Dollar Retracts - Gold Supported
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Summary:
- Natural gas futures fell by about 7% on Monday.
- UK's decision to rescind nearly all of its proposed tax cuts increased risk appetite.
- Persistent demand worries weighing on cotton.
NGAS futures fall
In response to record domestic production levels and weaker weather-driven demand, US natural gas futures fell by about 7% on Monday, to the lowest in three months. According to the most recent EIA data, US utilities added 125 billion cubic feet (bcf) of gas to storage last week, which is significantly more than typical and more than the market anticipated at 123 bcf. Due to the moderate weather and increased wind power, there were gains above 100 bcf for the fourth week in a row. According to Refinitiv, average gas production in the Lower 48 US states increased to a record 99.9 bcfd so far in October from a previous high of 99.4 bcfd in September. Reduced LNG shipments and a decline in demand brought on by Hurricane Ian's power outages also had an impact on gas prices.
NGAS Futures Price Chart
Gold futures stabilized
On Tuesday, the price of gold stabilized around $1,650 an ounce, halting a recent decline as the dollar lost some gain following the UK's decision to rescind nearly all of its proposed tax cuts, which increased risk appetite in the market. The US Federal Reserve is expected to tighten more in order to reduce inflation, which has continued to put pressure on the price of metal. Recent data revealed that US year-ahead inflation expectations rose, supporting the argument for more rate increases combined with a hot inflation report from September. Despite ongoing inflationary pressures and growing chances of a worldwide recession, gold also continued to perform poorly as a safe-haven asset as investors fled to the dollar due to rising US interest rates.
Gold Dec ‘22 Futures Price Chart
Cotton touching April 2021 lows
Cotton futures fell to a level last seen in April 2021 due to persistent demand worries, while rising interest rates strengthened the dollar and reduced demand for commodities priced in US dollars. On the supply side, however, an optimistic report from the US Department of Agriculture provided some support for the fiber. In light of the ongoing uncertainty on the extent to which unfavorable weather conditions, such as drought and heavy rain, may reduce output in top producer Texas and other states for the 2022–2023 season, the USDA has lowered its outlook for domestic supplies.
Cotton Dec ‘22 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com
