Commodities and Cryptos: Nat Gas volatility, WTI crude tops $90, Gold pares losses, Bitcoin lower

Natural Gas

The UK power regulator approved a 54% increase for prices starting on April 1st.  This follows the 12% price jump households saw in October.  UK energy companies can now pass along the rise in natural gas prices to consumers, which will punish 15 million that rely on floating rate pricing.

It looks like in just over a year, energy costs will double by the end of year, which could make 10% of families go into energy poverty.  The government is coming out with some subsidies, but that won’t be enough.  US Natural gas prices will remain extremely volatile as cold weather disrupts many wells.

Oil

Crude prices initially were led lower as a tech rout and surging yields sank every risky asset.  Energy traders remain committed to buying every oil price dip and that will probably remain the case until OPEC+ production catches up to demand.

WTI crude surged over the $90 level after an artic blast made its way to Texas and disrupted some oil production in the Permian Basin.  The oil market is too tight and vulnerable to any shock.  Even as thousands of flights are cancelled, the energy market is fixated over production and not so much short-term demand shocks.

It seems like $100 oil is not too far in the distant future and that will continue to be followed by growing pressure from worldwide leaders for OPEC+ to deliver more output.

Gold

Gold plunged after Treasury yields surged following after the ECB turned hawkish and the BOE showed they are ready to deliver more rate hikes. It is not just about worrying about the Fed raising rates too aggressively, but now the ECB is changing their tune about fighting inflation. Global inflationary pressures should lead to some flows into bullion and not necessarily mean the recovery is over.  Gold will likely continue to hover around $1800, but if next week’s inflation report comes in hotter-than-expected, with an annual reading above 7.3%, selling pressure could take gold below the January lows.

Bitcoin

Bitcoin continues to consolidate below the $40,000 level. Today’s risk aversion mood has Bitcoin lower as global bond yields surge over fears of persistently high inflation.  Bitcoin is forming a base and considering the selloff in tech stocks, crypto investors should be feeling a bit more optimistic that the bottom is in place.

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