Natural Gas Increases More than 5%
Natural gas climbed today as Brent oil dropped 0.79%.
Oil was down following a strengthening US dollar and growing fears over US inflation. An inflation reading is coming this week, and anxiety over the data is causing a dip in the oil prices but a rally for natural gas.
If inflation is on the rise, that would mean the Fed will hold off on cutting interest rates for longer. The Fed chairman stated earlier in the year that they would look for inflation to diminish before announcing rate cuts.
Natural gas prices managed to wing upward by 5.65%, hitting $1.77. Despite a recent drop, natural gas prices have kept the gains from earlier last week and remained high. With a resistance level at $1.80, natural gas has the potential to move higher in the short term.
Economic Outlook and Natural Gas
When the dollar improves, oil becomes pricier for anyone holding oil who does not have the US dollar. The dollar is helped along this week by economic trouble out of China and technical recessions in the Eurozone and Japan. US rate cuts will likely be delayed further, which could keep the US dollar buoyant.
Natural gas prices are likely to be affected by continuing Middle East tensions, with fighting ongoing between Palestine and Israel, with the United States and Iran now starting to get caught in the middle of that.
Natural gas has an overall bullish trend which should push it higher as long as it manages to keep its current level. The commodity has reversed the bearish trend of earlier in the year. It has not recovered fully from the losses, which brought natural gas down from $2.08 to bottom out at $157. However, the recent upswing has been steep and steady, indicating an opportunity to recover by later this year.
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