Natural Gas Prices Fall but Crude Oil is on the Rise
Gas prices ended down sharply in recent trading as forecasts for extended mild US weather plus growing supplies drove the front-month contract to another 11-month spot chart low.
Traders agreed mild weather stretching from Texas to New York over the last few weeks has helped drive front-month gas to a series of new lows. The natural gas futures market, which you can trade with CMC Markets, has just lost 5%, its biggest weekly loss in 10 weeks.
The US Energy Information Administration figures showed total domestic gas inventories rose by 97 billion cubic feet to 3.409 trillion cubic feet. While the build was slightly below the estimate of 99 bcf, most traders viewed it as bearish, noting it was well above the year-ago gain of 84 and the five-year average increase of 74 bcf.
Stocks of natural gas broke above the five-year average for the first time since mid-April in the previous set of figures. Traders also noted that the inventory gap to year ago has narrowed sharply from its June peak at 275 bcf, with stockpiles now just 2.2 percent below the same period last year. Most contracts for difference analysts expect the gap to shrink further in coming weeks as mild autumn weather opens the door to bigger builds.
Looking at the crude oil market, as was expected by many analysts, crude oil reached the first price level objective & closed up however it is important to tread cautiously with this commodity.
A City Index CFD market analyst suggested that, “At present oil is enjoying a rally to the up side after reaching our target level of $70 as the minimum objective. This week’s price resistance at $84 – $87 & more importantly at $91 will have to be monitored closely.
“If the commodity fails to breach above $91 then crude oil could certainly drop back below $77 to seek additional bearish moves down to the $60 mark. What really has to happen here is for crude oil to remain above $71 if there’s any hope for the buyers to reverse the recent downtrend. Having said that over the upcoming few weeks the pattern that builds will paint a more certain picture”.
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