Monday, May 21, 2012

Today's Major Market Move: Natural Gas Futures Up Over 14% Month to Date

After spending a few days below the $2 level at the end of April, Natural Gas front month futures have seen a little bit of a relief rally in May. They're up 14.7% month to date making them the best performing commodity (of the ones we track). Here's the top 10 gainers in the commodities space since May 1st:

Click here to go to the live table.
The gains are even more noteworthy when considering that many commodities and stock markets have sold off hard recently due to a resurgence of the European economic crisis. Higher than expected temperatures also helped to bolster prices. However this article from Reuters notes that with inventory levels remaining at all time highs and near capacity, many traders are skeptical that gains will hold.
The surplus to last year has dropped 13 percent from late March highs, but traders noted stocks are still at record highs for this time. There are still concerns that the storage glut will drive prices lower this spring as weather demand fades and pressure prices again this summer as storage caverns fill up.
One event that could help sustain the natgas rally is if central banks decide to take aggressive action in dealing with the latest round of problems in Europe. With Brent and WTI having given up some ground lately, we believe that the likelihood of additional liquidity injection is high (particularly from the ECB).

No comments:

Post a Comment