Commodity wrap - Natural gas, gold, oil (18.02.2025)

NATGAS

• Natural gas-based contracts have had a successful mid-February.
• Lower temperatures lifted NATGAS above its 50-day EMA, but now favorable weather conditions are waning.
• The latest weather forecasts point to a sizable warming in the western and central parts of the United States. Previously frosty conditions on the East Coast are also disappearing.
• Estimated demand for gas-fired power generation is also returning to the quoting range structure of +- 1 standard deviation, which may limit further strong price increases.
• The next two weeks may be characterized by a slightly larger reduction in EIA gas stocks relative to the 5-year average, but this is also the scenario assumed by the historical average.

The latest weather data shows strong warming relative to recent forecasts. Source: Bloomberg Financial LP

Higher temperatures will reduce demand for natural gas. It is now worth watching to see how much of a drop in crude inventories the EIA will present. Clearly lower-than-expected data may be key to maintaining upward momentum. However, it is worth bearing in mind that the last 5 years have shown strong inventory reductions during this period, which may not be surprising to the market now. Source: Bloomberg Financial L

Estimated demand for gas-fired power generation is returning to the structure of the quoting range of +- 1 standard deviation, which may limit further strong increases in crude. Source: Bloomberg Financial LP

GOLD

• The new Trump administration's chaotic trade policies, speculation around US tariffs as a mainly negotiating tool and a still weak dollar are supporting gold prices, which are testing the $2910 per troy ounce area.
• According to a CoT report from the U.S. Commodity Futures Trading Commission (CFTC), the 'Managed Money' group reduced bets on a rise in gold prices to the lowest level in four weeks. Despite this, last Friday gold closed its seventh consecutive upward week. It was the longest streak since 2020.
• Physical demand for gold remains strong, however. Net purchases by central banks and the jewelry industry are growing significantly.

On the demand side, the fundamentals behind the recent rise in gold prices remain strong. In measured terms, demand is now at its highest since early 2023. Source: Bloomberg Financial Lp

Available supply remains high, but here too, on the mining or recycling side, we are seeing declines in metal volumes relative to the last quarter. Source: Bloomberg Financial LP

WTI CRUDE

• Net positioning on Brent crude oil remains near the highest levels seen since the beginning of 2024.
• However, it is worth bearing in mind that this indicator has often been a contrarian factor to the price formation on crude.
• Oil stocks are rising strongly as far as the United States is concerned, thus offsetting the downward trend in production in the Middle East and Russia.
• The bullish factor for oil, however, remains the rising crack spread.

Demand for oil remains high if we look only at CFTC positioning. The amount of bullish bets remains near the highest levels seen since Q1 2024. Source: Bloomberg Financial LP

Oil stocks are rising strongly when it comes to the United States, offsetting the downward trend in production in the Middle East and Russia. Source: Bloomberg Financial Lp

In the U.S., the crack spread remains high, which could lead to prices remaining at current levels or rising even near the $75 per barrel level for Brent crude. However, we have recently seen an increase in US oil inventories, which is somewhat at odds with the elevated crack spread. Source: Bloomberg Finance LP, XTB