Crude Supported by Higher Stocks, Gold Falls on Profit-Taking, Natural Gas Erases Winter Rally

Commodity futures traded mixed on Monday on typically low volume ahead of the New Year’s holiday. With most of the major players on the sidelines ahead of tomorrow’s bank holiday, the price ranges were also tight with volatility well-below average. There weren’t any major reports either to guide the price action.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled slightly higher on Monday with most of the price action guided by the higher stock market. Stocks rose after President Trump posted a tweet claiming progress in the ongoing trade talks between the United States and China. However, gains were likely limited by a manufacturing report from China which came in below expectations.

On Monday, February WTI crude oil futures settled at $45.41, up $0.08 or +0.18% and March Brent crude oil futures closed at $53.80, up $0.59 or +1.10%.

For the year, WTI crude oil lost almost 25 percent, while Brent fell by nearly 20 percent. The new year will start with OPEC and its allies cutting output by 1.2 million barrels per day. However, this potentially bullish news will be overshadowed by fears of declining global trade, rising interest rates and sluggish economic growth.

Gold

Gold edged lower on Monday after hitting a 6-month high early in the session. The rally was fueled by another drop in the U.S. Dollar and lower Treasury yields. Helping to limit gains were higher equity prices. Stocks rose on optimistic news over U.S.-China trade relations, however, this still remained a major issue creating just enough uncertainty to underpin gold prices.

On Monday, February Comex gold settled at $1281.30, down $1.70 or -0.13%. The market was also up about 5 percent for the month. However, it finished the year down about 1.7 percent.

Natural Gas

Concerns over the weather and its impact on heating demand triggered a gap lower in prices on Monday with natural gas taking out its November bottom and thereby, wiping out its entire winter rally. The market closed low enough to put it in a position to challenge its September low.

On Monday, March natural gas settled at $2.851, down $0.297 or -10.42%.

Natural gas finished the month down 36.3%, marking the sharpest monthly drop since March of 2003. For the quarter, natural gas futures lost 2.3%, but ended the year with a slight, 0.4% annual drop.

Unless winter comes roaring back, it looks as if the top may be in for the winter season.