Natural Gas Futures Fizzle as Week Concludes

October 14, 2016 10:49AM CDT

Natural gas futures are fizzling from earlier highs this week as profit-taking hits commodities futures markets at the week’s end.

The November contract in natural gas futures sputtered lower, down 1.62 percent to 3.287 on Friday morning, after settling at 22-month high on Thursday after weekly data showed U.S. supplies rose less than expected.

On Thursday, the U.S. Energy Information Administration reported that domestic supplies of natural gas rose 79 billion cubic feet for the week ended Oct. 7, below the average rise of 87 billion cubic feet expected by commodities futures analysts. The EIA raised its 2016 forecast on spot natural-gas prices to $2.51 per million British thermal units, up 3.7% from the September forecast.

Upcoming frigid temperatures may also contribute to higher natural gas futures prices, with natural-gas heating bills expected to jump 22 percent this winter. The energy sector of commodities futures will be closely watched within the next few weeks as seasons change.

Commodities futures markets participants had a slew of reports to watch on Friday. Among them, the September Producers Price Index increased by 0.3 percent in September, according to the U.S. Department of Labor, compared to expectations of a 0.2 percent rise.

Retail Sales for September rose 0.6 percent in September, according to the U.S. Department of Commerce, in line with economists’ expectations and mostly due to continued strength in the auto sector. Auto sales increased 1.1 percent in September, while sales at gas stations climbed 2.4 percent, a reflection of higher gasoline prices. The report also saw strong sales in the restaurant and home furnishings categories.

The University of Michigan said its index for early October slid to 87.9 from 91.2, below expectations of a 92.0 reading among economists.

The August report of Business Inventories increased 0.2 percent after being unchanged in July, according to the U.S. Department of Commerce.

The September Treasury Budget is due this afternoon.

Commodities futures markets participants have been heavily scrutinizing U.S. economic data recently, for clues from the Federal Reserve regarding raising interest rates later this year. According to the CME Group's FedWatch tool, market expectations for a December rate hike are more than 60 percent.

Next week’s U.S. economic calendar brings some notable reports to the commodities futures markets, including the Consumer Price Index and Industrial Production/Capacity Utilization. Housing Starts and Building Permits are also slated for release, as is September Existing Home sales.

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