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Nat-gas down but remains on track for 50% Q2 gains

Friday, June 28, 2024

Today’s headlines

What’s happening: Natural gas prices edged lower on Thursday but remained on track to end the second quarter of 2024 with massive gains.

What happened: Natural gas has been climbing on supply concerns and higher demand due to the heat wave in the US.

Prices eased on Thursday with signs of production growth and high storage levels in the US.

Why it matters: The EIA (Energy Information Administration) said on Thursday that US utilities added 52 billion cubic feet (Bcf) of natural gas into storage during the week ending June 21. Although the figure came in slightly lower than market expectations of a gain of 53 Bcf, it represented the 12th straight week of increase in storage.

In the previous week, US natural gas stockpiles rose as much as 314 Bcf, taking the total inventories to 3,097 Bcf, higher than the five-year historical range.

News of higher stockpiles in the US exerted pressure on natural gas prices, despite forecasts of the heat wave in the country to last through mid-July, sustaining high demand for the commodity.

Earlier this week, supply concerns had taken natural gas prices higher, after the EU imposed a new round of sanctions on Russia. Although the latest sanctions ban the transshipment of liquified natural gas (LNG) off ports in the region, the EU has not levied a ban on LNG imports.

Natural gas for August delivery fell 1.90% to $2.685 on Thursday. Nat-gas is still on track to recording 50% gains in the second quarter of the year.

Meanwhile, crude oil prices rose, extending the gains recorded so far this month, with speculations of an increase in US gasoline demand in the summer months.

WTI for August delivery rose 84 cents, or 1%, to settle at $81.74 a barrel on the New York Mercantile Exchange. August Brent crude added $1.14, or 1.3%, to $86.39 a barrel on ICE Futures Europe.

What to watch: Investors will monitor weather conditions in the US, as the country is expected to continue facing a hotter-than-usual summer till mid-July. Markets will also watch any signs of supply disruptions due to the Middle East tensions.

The markets today

US stocks will be in focus today ahead of the release of the PCE price index

Context: The leading US stock indices settled higher on Thursday but only marginally as investors remained cautious ahead of the PCE release.

Details: US stock indices traded almost sideways, as investors remained cautious ahead of the release of May’s core PCE (personal consumption expenditures) price index. This is the Federal Reserve’s preferred measure of inflation, and any meaningful easing of prices would give the US central bank more flexibility to cut rates. Lower interest rates boost economic and corporate growth.

Traders widely expect the Fed to cut interest rates this year, although there is uncertainty about the timing.

Shares of semiconductor companies mirrored the decline in Nvidia’s stock. Micron Technology’s shares fell more than 7% on Thursday.

While investors have so far not reacted to the US elections in November, sentiment remained subdued ahead of the Joe Biden and Doland Trump Presidential debate, scheduled after the markets closed.

The S&P 500 closed higher by 0.09% at 5,482.87. The Nasdaq 100 0.30% to end at 17,858.68, while the Dow Jones index added 36.26 points, or 0.09%, to settle at 39,164.06.

What to watch: Investors await the release of economic data on the core PCE inflation gauge from the US today. The index remained unchanged from the prior month at 2.8% on an annualised basis in April and is expected to ease to 2.6% in May.

Other Markets: European indices closed mostly lower on Thursday, with the STOXX Europe 600, CAC 40 and FTSE 100 down by 0.43%, 1.03%, and 0.55%, respectively, and the DAX 40 up by 0.30%.

The news shaping the markets

Russian gas giant Gazprom has signed an agreement with Iran for supplying natural gas, after the EU imposed further sanctions. The news sent the RUB/USD sharply higher in forex trading on Thursday.


Mexico’s central bank held its benchmark interest rate unchanged at 11.00% in June, in-line with expectations, exerting pressure on the MXN/USD forex pair.


Japan’s unemployment rate came in unchanged at 2.6% in May, matching consensus forecasts, which sent the JPY/USD higher in forex trading this morning.


Brazil’s nonfarm payrolls rose by 132,000 in May, versus 240,000 in the previous month. The figure coming in short of market expectations of 200,000 job adds exerted pressure on the BRL/USD forex pair.


South Korea’s industrial production grew 3.5% year-on-year in May, following a 6.2% jump in the previous month. The figure coming in higher than market expectations of 2.3% sent the AUD/USD slightly higher in forex trading this morning.

What else to watch today

US personal income, personal spending, Chicago PMI, Michigan consumer sentiment and Fed Bowman speech, Argentina’s economic activity, EU’s consumer inflation expectations, Spain’s consumer confidence, Russia’s money supply, and Mexico’s fiscal balance.


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