Natural gas, Hurricane East, Federal Reserve, inflation – a topic
- Natural gas futures will reach a fresh 7-year record as supply is still limited
- Fears of more persistent inflation, exacerbated by rising commodity prices
- Much of the US supply in the Gulf of Mexico will be disconnected from the East after the hurricane
The price of natural gas futures rose to a fresh 7-year level on Wednesday, as supply concerns increase before the transition to the autumn and winter months. As supply is already at a worryingly low level, natural gas prices raised the prospect of higher demand as temperatures cooled in the autumn months. $ 5.00 / MMBtu. Following the arrival of Hurricane East in the Gulf States, high demand has been met by supply constraints. According to Bloomberg, about 78% of US gas production in the Gulf of Mexico remains offline.
The sharp rise in natural gas is just one of many factors driving the debate on inflation, as consumers are rethinking whether recent price rises have become structural rather than transient. Higher gas prices could pose a serious challenge to the Fund’s goal of reviving the US economy soaring energy costs, which can potentially limit household overheads. A permanent rising energy prices could cause businesses et raise prices and /or wages revenge, putting further pressure on the Federal Reserve’s view that recent price increases are only “temporary”.
4-hour schedule of natural gas futures
The chart is created using TradingView
The recent rise in natural gas prices is due to major supply constraints, not just technical disruptions. Nevertheless, the outlook on the New York Mercantile Exchange (NYMEX) on both fronts for natural gas futures trading is constructive. After a quick break from the 0.786 Fibonacci level to test $ 5.00, prices have cooled slightly to around $ 4.92.
Given the constructive basic setup of natural gas prices, it would not be surprising to see a $ 5.00 retest in the near future, even though the current contract has already been overbought, according to daily RSI. Should the price postponement occur, pulling the 0.786 Fibi level back to $ 4.776 could turn natural gas back into a new $ 5.00 level test. Continuing this step, the 1,616 Fibonacci expansion could come into play for $ 5.69, with the highest level in 2014 exceeding $ 6,493.
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– Written Brendan Fagan, intern
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