Natural gas fell 5.58 percent to 2.64 dollars per million British thermal units, the largest move in the tables, and it fell into a crowded trade. Hedge funds now hold a short position of 599,731 contracts in US natural gas, the largest since May 2013 (see today’s hedge fund natural gas story). The fall came despite Indonesia cutting piped gas exports to Singapore from today, a supportive development, and no clear single fundamental driver for the size of the drop appears in this morning’s reporting; the positioning extreme is the documented context, and it leaves the market exposed to a sharp squeeze on any cold weather or supply surprise.
WTI crude rose 3.82 percent to 103.27 dollars a barrel and Brent rose 3.14 percent to 116.72 dollars, Brent’s highest settlement since April 29. The driver is Gulf supply risk: Houthi attacks on Saudi Arabia, Saudi Aramco’s evacuation of its Dhahran headquarters and tanker markets pricing disrupted flows (see the updated Brent story and today’s tanker rates story, where Asian crude orders for November are running about half their usual level and Gulf to China rates remain extreme even after falling from a record).
Precious metals moved the other way. Silver fell 1.92 percent to 53.71 dollars an ounce, silver miners fell 2.54 percent and gold miners fell 1.82 percent, tracking bullion rather than company news. Gold fell 1.29 percent to 4,007.90 dollars an ounce at the futures settlement, and spot gold broke below 4,000 dollars to 3,986.85 dollars, its lowest since July 20, as the liquidation tied to the technology selloff and higher for longer rate expectations continued (see the updated gold story).
Copper rose 1.78 percent to 6.48 dollars a pound, paring its weekly loss. No clear single driver for the day’s rise appears in this morning’s reporting; the standing supply context is Chilean output, which the country’s finance minister has put down 8 to 9 percent this year.
The cross-market read is a supply shock tape. Crude, products and tanker capacity are bid on physical disruption in the Gulf, industrial copper is firmer, and the assets usually bought for safety, gold and silver, are being sold instead, which says the move is about positioning and liquidity rather than a flight to havens. The day’s policy backdrop, US yields edging back up with the 10-year at 4.99 percent, reinforces that reading.