Futures File

July, 29, 2016

Natural Gas Rises

Natural gas sprang to life this week, jumping up by 21 cents on Thursday.

The increase in natural gas stockpiles was only 17 billion cubic feet, which is the smallest increase in summertime for the last ten years.

One of the reasons for the small increase was the fact that the eastern seaboard has been having unusually hot weather.  More people have been running their air conditioners to combat the heat, so more natural gas is being used to power the AC.  The reduced stockpile has some traders concerned this could affect natural gas in the winter, when it becomes the primary fuel for heating homes.

US farmers use natural gas for grain production for drying crops in the bin and gas serves as the major component for producing nitrogen fertilizers in the US. Forward thinking corn growers must now add gas prices, along with insects, weeds, and weather, to their watch lists.

Gasoline Prices Continue South 

Unlike natural gas supplies, which continue to decline, the world-wide production of gasoline can’t seem to hit the brakes.  The glut is worsening as crude producers continue to pump, refineries continue to crack, and storage tanks of unleaded of all sizes are filled to the brim.  Inventories are now 11% over this time last year despite increased demand from summer drivers who are thrilled about cheap fuel. 

The one big question on the mind of drillers, refiners, and investors is will the price of crude be able to hold above $40.00 per barrel?

Dollar Dumping Helps Commodities

The U.S. dollar dropped on Friday when the weaker than anticipated U.S. gross domestic product report came in way weaker than expected.  Virtually all commodities, from soybeans to silver and from crude to cattle, saw a boost at week’s end as a weak dollar makes our exports cheaper and more attractive to international buyers whose paper suddenly will buy more.

Soybeans jumped 17 cents, gold and platinum rose over $15 per ounce, crude recovered 11 cents, sugar was up almost 2%, and foreign currencies rallied significantly.  As of midday Friday, the Japanese yen, for example, blasted up 3% on the day.

For over 18 years, Walt taught his method of trading at Purdue University. His comments on the markets have been featured in USA Today and other national outlets.

Walt's weekly commentary has been published for nearly 25 years. Futures File, written on Fridays for Saturday publication, provides a brief summary of commodity futures market highlights for the week.