WTI, natural gas trade near highs while lumber price drops to 8-month lows
The outlook on WTI and natural gas remains bullish while that of lumber is bearish.
WTI trades close to 3-month highs
WTI has been trying to push through last week’s $118.98 high for the past three days, as the relaxation of China's Covid curbs and the summer driving season in the US are expected to increase demand, but so far to no avail.
Provided that no slip through yesterday’s low at $115.72 is seen, immediate upside pressure should be maintained with the minor psychological $120 mark being in focus once a rise above the current June high at $118.98 has occurred.
Next up are the $125 area and the March peak at $126.74. Good support below yesterday’s low at $115.72 remains to be seen along the uptrend channel support line and 17 May high at $113.31.
Natural gas futures remain close to multi-year highs
Natural gas futures yesterday briefly rose to $9.53, above their $9.43 May high, and to levels last seen in August 2008 amid solid global demand for energy which continues to push natural gas prices higher.
Recent data from the US Energy Information Administration (EIA) shows that working gas in storage is 15.1% lower compared to the five-year average as US crude oil inventories are also 15% below their five-year average for this time of the year, indicating that energy supply remains tight.
Despite yesterday’s foray into multi-year highs, the natural gas futures contract continues to display a rising wedge formation which may eventually lead to a trend reversal. It occurs when new highs are compressed and is a bearish chart formation as it points to a possible trend reversal during an uptrend but only when the price slips through the lower uptrend line.
At present the uptrend line seems to be far away, though, at $8.56. Minor resistance comes in along a one-month resistance line at $9.74 as well as at the psychological $10 mark.
Lumber prices trade at 8-month lows
The price of lumber continues its descent amid soaring inflation and US mortgage rate rises which negatively impact the demand for the commodity.
US data from May showed that 54% of US home builders say that higher mortgage rates are having a detrimental effect on their business. The sharp drop by nearly 55% from its March one-year high at $1,340 per thousand-feet boards in the price of lumber has so far taken it close to its November low at $592 as production has been ramped up in some areas of the US. Together with the mid-September low at $571 it may offer interim support.
Immediate downside pressure should be maintained as long as the price of lumber remains below its last reaction high, that is to say a candle which has a higher high than that to its left and right as was the case yesterday at its $647 high.
Slightly further up the 4-month downtrend line can be spotted at $693.
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