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On May 14th, US international trade commodity prices rose sharply in April, with import prices (market expectation +1.0%) rising 1.9% month-over-month and export prices (market expectation +1.1%) surging 3.3%. This much-anticipated increase indicates that the ongoing conflict with Iran continues to exert pressure on input costs, a point already reflected in the Feds Beige Book in early April as a compression of corporate profit margins. Core import prices (excluding fuel) had already begun to rise significantly before the Iran conflict, and this months 0.8% increase was the same as in February, but this may already include the secondary impact of rising energy prices. Food and feed prices were also significantly affected by rising oil prices, rising 1.1% in March and then another 0.9% in April. Industrial supplies and raw materials (excluding fuel) rose 1.6%; fuel prices surged 16.3%. Capital goods prices were also worrying, rising 1.1%. Consumer goods rose 0.4%, a relatively moderate increase, but still high; automobile prices fell slightly by 0.1%.On May 14th, executives from over ten well-known American companies accompanied President Trump on his visit to China, including Apple CEO Tim Cook, Nvidia founder and CEO Jensen Huang, Tesla CEO Elon Musk, and Qualcomm President and CEO Cristiano Amon. In an interview, Amon stated that the Chinese economy is dynamic.The SC crude oil futures contract fell 2.00% during the day, currently trading at 617.40 yuan per barrel.The European-Mediterranean Seismological Centre reports a 5.5-magnitude earthquake in the Colombian region.May 14th - Traffic in the Strait of Hormuz has increased this week, but analysts warn that more vessels are turning off their Automatic Identification System (AIS) tracking signals during transit. According to Lloyds List, a shipping publication, tanker owners are preparing for prolonged shipping disruptions as regional risks remain high. Current traffic volume is still far below pre-conflict levels. At that time, approximately 130 vessels carrying about 20% of the worlds oil and gas supply passed through the strait daily.

Natural Gas: XNG/USD bears continue to monitor $2.13 in advance of EIA inventories

Daniel Rogers

Mar 30, 2023 15:59

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Natural Gas (XNG/USD) price fluctuates near the intraday low of $2.23, declining the previous day's corrective rebound off a five-week low ahead of Thursday's European session. In doing so, the energy instrument fails to bolster expectations of increased demand from China in the face of inflation concerns, hawkish central bank actions, and a stronger US dollar.

 

China's willingness to import 65,000 tonnes of Liquefied Natural Gas (LNG) from the United Arab Emirates (UAE) and Premier Li Qiang's upbeat comments have supported the XNG/USD. Premier Qiang of China stated that the economic situation in March is even better than in January and February. However, the policymaker also increased geopolitical tension by opposing trade protectionism and decoupling, which indirectly target the United States and stimulate the Natural Gas bulls.

 

On the other hand, rumors that German gas pipelines are once again reliable for transporting energy, following previous challenges from Russia, impact on the XNG/USD exchange rate. In addition, the majority of central bankers defend their prior bias regarding inflation, exerting downward pressure on the commodity. In addition, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, stated on Thursday, "Urgently need faster, more efficient mechanisms for providing debt support to vulnerable countries." Her remarks revive previously alleviated banking concerns.

 

The US Dollar Index (DXY) adheres to modest gains while S&P 500 Futures struggle around a one-week high set the day before. In addition, the yields on the 10-year and 2-year US Treasury bonds grind higher after tantalizing bond purchasers the day before.

 

Moving forward, Weekly Natural Gas Storage Change data from the US Energy Information Administration (EIA), preceding -72B, may influence XNG/USD price action. Nonetheless, the headlines surrounding inflation and the banking system, as well as China, should be given the utmost focus for direction.

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