Natural gas storage dropped -86 bcf to 2521 bcf in the week ended January 22. At current level gas inventory was +120 bcf higher than the same period year and +87 bcf (+3.6%) higher than 5-year average. The benchmark contract for natural gas slid for 4 consecutive days from Monday to Thursday, losing almost -12%.
Weather forecasters in the US indicate that temperature will rise above normal, in the coming 6-10 days to 11-15 days, from the Midwest to the East. In December as well as the past 2 weeks, we saw rather strong bids in gas futures as the market speculated cold weather in the Northern hemisphere would increase consumption. However, as weather gets warmer, demand will subsides. Together with the fact that gas storage remains ample and LNG imports are poised to surge this year, gas price should remain under pressure.
Decline in base metals accelerated in recent days amid worries about potential impacts of monetary policy tightening, stricter lending from banks and slowdown in global economic recovery. LME copper for 3-month delivery plummeted -7.4% to 6898 Thursday, following a -2% fall a day ago. Nickel outperformed the complex with +0.85% gain yesterday. On weekly basis, the metal will probably close flat. Near-term trading momentum should remain skewed to the downside as step-up in tightening in China and unwinding of stimulus measures in the US and the Eurozone should dampen expectation for demand growth.
Gold price trades narrowly around 1083 in European session, there's high risk for the yellow metal to weaken further as traders are dumping the euro, sending it below 1.4 against USD. Crude oil also gyrates around yesterday's close at 73.64. Investors prefer to standstill ahead of the US GDP report.
In Iran, 2 people were sentenced to death after leading demonstrations against Iran's elections. The executions triggered condemnation from the US. President Obama said that action would 'only serve to further isolate' Iran. However, elevated geopolitical tensions between the US and Iran failed to stimulate demand for gold and oil, whose prices normally surge during political unrests.