News / Business
Natural Gas Prices Disregard Crude Oil Rally
Weakness in the U.S. Dollar is driving crude oil prices significantly higher and this trend isn’t expected to change in the near future. Meanwhile, natural gas prices are paying no attention to this rally.
Yesterday was another dismal day for the U.S. Dollar. As it fell to 2009 lows, equities and crude oil rallied. The rally started as Intel and JP Morgan released positive earnings. By the end of the day, the Dow climbed to its highest point yet in 2009, as did the November 2009 crude oil NYMEX contract as it neared $76 per barrel.
“Crude oil prices are moving upward as if demand is outpacing supply,” says Valerie Wood, President of Energy Solutions, Inc. “That’s not the case, but fundamentals don’t matter at this time. Investors are flocking to crude oil because of the weaker dollar.” In order for the trend to change, the U.S. dollar has to strengthen against other currencies, and that is unlikely to occur without some sort of intervention by the U.S. government relative to its current monetary policy.
“In the meantime, natural gas is in its own world,” says Wood. “Record level storage inventories have been a key factor in pushing natural gas prices lower. Right now, there is a lot of natural gas supply, and industrial demand isn’t yet showing signs of any significant rebound.”
Learn more about the direction of crude oil and natural gas prices in the October edition of The Advisor. Request your complimentary copy by sending your request to request-oct-pr15@energysolutionsinc.com or call (608) 848-9859.
