Trading Economics Natural Gas Comments
US Natural Gas futures were trading around the $9.10/MMBtu mark, not far from a 14-year peak of $9.75/MMBtu hit in late July, buoyed by strong overseas and domestic demand. The temperatures in the US this summer remain high, with several heatwaves boosting demand for air conditioners. On top of that, Freeport LNG has recently agreed with regulators to partially restart operations in October at its shuttered export plant in Texas and said it began to pull in tiny amounts of natural gas from pipelines. The resumption of flows will withdraw more natural gas from storage and boost exports. Adding to the bullish outlook, demand from Europe remains strong as the critical Nord Stream 1 pipeline from Russia to Germany is currently running at 20% capacity. Meanwhile, the latest EIA data showed a smaller-than-expected injection into inventories for the week ending August 12.
Natural Gas Price For Past One Year
The price of natural gas has been climbing for most of the month. This will translate to higher electrical costs in the CPI report for August.
The EU is much worse off compared to the US.
EU Natural Gas Price
Trading Economics Comments
A historic drought triggered by an arid summer that set heat records across Europe threatens to halt energy shipments along the Rhine River while limiting hydroelectric and nuclear power production. Exacerbating concerns about supplies, Russia’s Gazprom has dramatically reduced flows through the Nord Stream pipeline to roughly 20% of its capacity, citing issues with turbines. What could be Europe’s biggest energy crisis in a generation has already prompted German regulators to advise that the bloc’s largest economy must cut its natural gas use by 20% to protect themselves against a natural gas shortage this winter.
US Gasoline Futures
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Gasoline futures have mostly been steady all month. The AAA National Average Gas Price is $3.904 today, $3.908 yesterday, and $3.959 a week ago.
US CPI Impact
On August 10 I commented CPI Month-Over-Month Was Unchanged, Year-Over-Year Up 8.5 Percent
- The gasoline index fell 7.7 percent in July and offset increases in the food and shelter indexes, resulting in the all items index being unchanged over the month.
- The energy index fell 4.6 percent over the month as the indexes for gasoline and natural gas declined, but the index for electricity increased.
- The food index continued to rise, increasing 1.1 percent over the month as the food at home index rose 1.3 percent.
- The index for all items less food and energy rose 0.3 percent in July, a smaller increase than in April, May, or June.
- The indexes for shelter, medical care, motor vehicle insurance, household furnishings and operations, new vehicles, and recreation were among those that increased over the month.
- The indexes for airline fares, used cars and trucks, communication, and apparel declined in July.
If the price of gasoline stabilizes for another 10 days, then gasoline will not offset increases in electricity and shelter in August.
So don’t expect another “no inflation” reading in the next CPI report.
This post originated at MishTalk.Com
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