Natural Gas Declines As Inventories Increase

Key Insights

• Natural gas declined towards the $6.70 level. 
• WTI oil gained ground as U.S. dollar declined. 
• Weaker dollar has also provided material support to precious metals. 

Natural Gas Slides Back To Recent Lows

Natural gas moved back to $6.70 after an unsuccessful attempt to settle above the $7.00 level.

EIA Weekly Natural Gas Storage report indicated that working gas in storage increased by 103 Bcf. At current levles, the total working gas is within the five-year historical range, which is mostly bearish for natural gas markets.

Traders continued to ignore the recent developments in Europe, where Nord Stream pipelines were damaged by explosions. At this point, it looks that the U.S. market will stay focused on the dynamics of demand after Hurricane Ian.

WTI Oil Continues To Rebound

WTI oil is currently trying to settle above the $82 level as the U.S. dollar pulls back from recent highs.

The U.S. Dollar Index has recently gained downside momentum, which was bullish for commodities.

From a big picture point of view, WTI oil remains in a downside trend. The previous attempts to rebound in August – September faced strong resistance. To have a chance to gain sustainable upside momentum, WTI oil must settle above the 20 EMA, which is located near the $84 level.

Gold Tests Resistance At $1660

The recent pullback in the U.S. dollar provided material support to gold, which managed to get back towards the resistance at $1660. Interestingly, Treasury yields are moving higher, but this move does not put material pressure on gold markets. At this point, it looks that gold traders will stay focused on the dynamics of the American currency.

Meanwhile, silver found support at $18.50 and moved towards $18.80. Platinum made an attempt to settle above the 20 EMA at $875, while palladium settled back above the $2200 level. I’d note that palladium gets additional support as traders evaluate the potential content of the next sanctions package on Russia, which may include some measures against Russia’s Norilsky Nickel.

Copper Rebounds As Dollar Pulls Back

Copper moved back above the $3.40 level as commodity markets rebounded. Weaker dollar has likely triggered this move.

From a big picture point of view, traders will stay focused on the economic outlook. In case recession fears put additional pressure on commodities, copper will get back to recent lows near the $3.25 level.

For a look at all of today’s economic events, check out our economic calendar.