Nat­u­ral gas leads com­mod­ity gain­ers in Novem­ber


NAT­U­RAL GAS WAS BEST per­form­ing com­mod­ity in Novem­ber, de­fy­ing over­all losses in the en­ergy sec­tor that saw crudeoil prices drop by more than 20 per­cent for the month.

An in­crease in nat­u­ral-gas prices isn’t all that sur­pris­ing given that de­mand for the heat­ing fuel tends to in­crease as tem­per­a­tures drop to­ward the end of the year, but the climb in nat­u­ral gas was im­pres­sive, with fu­tures prices climb­ing by roughly 38 per­cent month to date as of Fri­day, in­tra­day.

To­tal U.S. sup­plies of nat­u­ral gas in stor­age also stand at 3.054 tril­lion cu­bic feet as of the week ended Nov. 23, down about 19 per­cent from the five-year av­er­age.

Against that back­drop, fu­tures prices for the com­mod­ity set­tled at $4.837 per mil­lion Bri­tish ther­mal units on Nov. 14, the high­est fin­ish for a front-month con­tract since Feb. 26, 2014.

The next trad­ing day, how­ever, prices saw their big­gest one-day per­cent­age loss in more than 15 years.

U.S. nat­u­ral-gas tight sup­plies have been tight, but pro­duc­tion is at or near record highs, ac­cord­ing to Will Rhind, chief ex­ec­u­tive of­fi­cer of ex­change-traded fund is­suer Gran­iteShares. “Pro­vided there is no hic­cup in U.S. nat­u­ral-gas pro­duc­tion, in­ven­tory lev­els will likely rise as win­ter fades into spring, pos­si­bly push­ing nat­u­ral-gas prices lower.

All the while, prices for both U.S. and global bench­mark crude oil have fallen by more than 20 per­cent this month, both have the po­ten­tial to move up in the weeks and months ahead.

Rhind at­trib­uted the de­cline to record pro­duc­tion in the U.S., Saudi Ara­bia and Rus­sia, U.S. waivers for eight coun­tries on Iran sanc­tions and con­cerns of weaker global eco­nomic growth which di­min­ished oil de­mand ex­pec­ta­tions. U.S. crude sup­plies have also climbed for 10 weeks in a row.

“But it seems likely Saudi Ara­bia will not re­peat mis­takes made in 2014-2016, where it kept pro­duc­tion high to main­tain mar­ket share while driving oil prices to ex­tremely low lev­els,” said Rhind.

Over­all, how­ever, the com­modi­ties sec­tor de­clined in Novem­ber.

Among other big com­mod­ity movers in the month of Novem­ber, sup­ply con­cerns contributed to a more than 15 per­cent rise in lean hog prices and a nearly 8 per­cent climb for pal­la­dium.

Mean­while, pal­la­dium, which is used in cat­alytic

con­vert­ers for gaso­line en­gines, saw strong au­to­mo­bile man­u­fac­tur­ers’ de­mand, with fu­tures hit­ting a record set­tle­ment of $1,154.60 an ounce on Nov. 16.

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