News / Business
Natural Gas Prices Linked to S&P, U.S. Dollar, and Crude Oil
The latest unemployment report created a lot of euphoria in the markets that an economic rebound is near, but that optimism is likely to evaporate just as it did a few months ago because the markets have gotten ahead of themselves.
Today, natural gas prices are impacted by a lot more than just supply and demand. There seems to be an inherent link to crude oil prices, and with that connection, it means there is also an indirect link to what is happening with the U.S. Dollar and the S&P 500. All of these factors have become much more intertwined over the past year.
“It’s hard not to be excited about what is happening,” says Valerie Wood, President of Energy Solutions, Inc. “The Nasdaq is up 60% from its March low and the S&P is hanging around 1000. World equities are at a high and analysts are predicting GDP growth of 2.0% in the third quarter and 2.5% in the fourth quarter. But, we think the markets have just gotten ahead of themselves – moving up too far and too fast.”
Consumer spending is a requirement for economic recovery. When crude oil prices are higher, the cost of many products is higher, particularly gasoline. This means more a consumer’s disposable income goes toward everyday expenses, and this leaves less for discretionary spending. “Consumer spending rose 0.4% in June, but when adjusted for inflation it actually fell 0.1%. Plus personal income fell 1.3% in June,” says Wood. “These aren’t good numbers to suggest an economic recovery is underway.”
In its latest monthly edition of The Advisor, Wood provides an expansive article on how various economic factors are going to ultimately impact crude oil and natural gas prices and why energy commodity markets are poised for a significant correction in the next 30-90 days. Request your free copy of the August 2009 edition of The Advisor by sending your request to request@energysolutionsinc.com or call (608) 848-9589.
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About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 25 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.
