Primary Commodities Report for February 17th– 28th
By: Isha Khan, The Quinnipiac University Economics Research Team
Commodities Index
Source: Yahoo Finance and own calculations. Rates are in United States dollars per one (1) unit of goods. Brent Crude Oil is measured in barrels. Natural Gas is measured in MMBtu (Million British Thermal Units), Gold is per troy ounce, and for Nickel the price reflects price per share of (NIKL) ETF. They are all indexed to be at 100 at the start of the period.
In the two weeks of February 17th to February 28th, Natural gas is by far the biggest mover relative to the other commodities tracked, while the rest have shown much less volatility in comparison. Natural Gas (green) saw a jump right in the first two days of the 11-day period jumping to a period high of 18.75% above the baseline. From there the price staggeringly decreased with another smaller jump from February 24-25 and ending the period at 6.48% above the baseline. Gold (yellow) showed the least volatility overall as the price consistently rose to 1.84% above the baseline on February 24th then began to descend, ending the two weeks at 2% below the baseline. Nickel (red) and Brent Oil (black) showed similar trends with both prices reaching their two-week highs on February 20th then decreasing, ending the period at 6.77% and 2.83% below their baselines respectively.
Commodities Historical Trends
Source: Yahoo Finance and own calculations. Rates are in United States dollars per one (1) unit of goods. Brent Crude Oil is measured in barrels. Natural Gas is measured in MMBtu (Million British Thermal Units), Gold is per troy ounce, and for Nickel the price reflects price per share of (NIKL) ETF. The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.
As February comes to an end, all the commodities observed show noticeable shifts in their three-month trends. Gold price has shown the first significant drop in price since the strong upward trend it has been on since January, dropping from the three-month peak of $2955.80/troy oz on February 20th to $2836.80/troy oz on February 28th, the end of the three-month period. Brent Oil price has continued to decrease in price since mid-January ending below the three-month rolling average at $73.18/barrel. Following the sharp decline at the end of January and the large increase at the beginning of February, Natural Gas prices have continued this strong upward motion peaking at $4.476/MMBtu. Nickel prices still seem to follow the turbulent decline we have seen over the past three months. The price has ended this three-month period at a low of $9.50/share.
Additional Reading
A simple supply and demand perspective can provide strong insight into why we see such a noticeable jump in the price of natural gas. Continued cold weather in North America and Europe increases the demand for the commodity. These extreme cold conditions have even caused challenges on the supply-side where some operations have had to halt their gas extraction. Because of this there has been increased drawings from stored inventories, causing price expectations of natural gas to rise and thus increasing the price even further. Overall, the increased demand along with the higher price expectations and obstacles in the extraction of natural gas have shot prices up to a record high in the last 2 years.
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