Natural Gas Flickers Lower Pre-Fed, Post-OPEC

December 13, 2016 7:16AM CST

Natural gas futures prices are on a low flame as the energy sector of commodities futures awaits the Federal Reserve meeting outcome, and as OPEC news continues to flood the market.

The January contract in natural gas futures fell .31 percent to 3.496 in mid-day commodities futures markets trading ahead of supply reports from the American Petroleum Institute and the Energy Information Administration this week.

The International Energy Agency said Tuesday in its final annual report that it expects the global crude oil glut to start disappearing in the first half of next year, much earlier than it previously predicted. The major condition is that OPEC and its partners must stick to their agreement to cut production. OPEC producers want to do this in order to push crude oil futures prices higher -- but only within certain limits – which will in turn make an impact on natural gas futures prices.

The cartel has agreed to cut its overall production by 1.2 million barrels a day starting in January. A group of non-OPEC nations including Russia, Mexico, Kazakhstan and Oman have also committed to decrease output.

Crude oil futures prices wavered around unchanged at 52.83.

Commodities futures markets and equity market investors alike are awaiting the start of the two-day Fed meeting that is widely expected to end with the announcement of higher interest rates on Wednesday afternoon. Investors will also be listening to commentary for hawkish rhetoric and expectations from the Fed in the coming year.

In U.S. economic data, Import Prices fell 0.3 percent in November, according to the U.S. Bureau of Labor Statistics. It was the largest decline since February, when oil prices also dropped. Import prices were mostly flat in the 12 months from November 2015 to November 2016. Last year at the same time, import prices were falling at a double-digit rate in percentage terms, hit by the impact of low petroleum costs.

In the other portion of the report, U.S. export prices fell 0.1 percent in November. Fuel imports sank 3.9 percent in November.

Also of note to participants in the financial sector of commodities futures markets, a 30-year bond auction is scheduled for today at noon CST.

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