Technically Speaking

A Technical Look at Energy Futures and an Interest Rate

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
Connect with Todd:
Just in the past month, natural gas prices have risen to their highest level in over seven years, November crude oil closed at a new contract high and the yield on 10-year T-notes turned higher, signaling concerns about energy supplies ahead of winter and improvement in the economy (DTN ProphetX charts).


November natural gas closed up 5.4 cents last week to $5.20 per million Btus Friday, down from the September high of $5.695, but still near its highest prices in over seven years. Many factors have contributed to the higher prices, but it mainly started in 2020 when the pandemic erupted, world oil demand fell, Saudi Arabia temporarily increased production and oil prices plummeted, causing U.S. oil fields to close and natural gas production to be curtailed. In early September, Hurricane Ida shut production in the Gulf and the Department of Energy shows U.S. natural gas supplies down 16% from a year ago. Technically speaking, spot natural gas prices have been trending higher since April and broke above the 2018 high of $4.93 in early September, helped by Hurricane Ida. The weekly stochastic suggests prices could be nearing a peak, at least temporarily, but prices haven't broken their upward momentum or made a new low yet.


November crude oil closed up $2.16 last week, ending at a new 2021 high of $73.98 Friday. Spot crude oil prices had been trending higher since November, recovering from last year's sudden glut, caused by the pandemic and Saudi Arabia's increased production. Prices dipped lower in August with concerns about the impact of the Delta variant spreading through China but didn't stay down long. Debt problems at China's real estate developer, Evergrande, hit prices Monday (Sept. 20), but once again, the bearish market reaction proved temporary, and prices have resumed their uptrend. Crude oil's uptrend continues, and prices may soon be challenging the 2018 high of $76.90. Historically, crude oil prices above $80 have signaled problems with tight supplies.


The yield on the U.S. 10-year Treasury Note increased from 1.37% last week to 1.46% Friday, the highest rate seen since July 1, nearly three months ago. Officially, the Federal Reserve left the federal funds target unchanged Wednesday (Sept. 22), but did say it would soon reduce monthly bond purchases, if the economy continues to improve. An official rate hike is not expected until later in 2022, but Friday's higher yield suggests traders are seeing signs of job growth and economic improvement. Technically, the weekly stochastic has turned higher and Friday's higher yield was back above the 100-day average after leaving behind a higher low in July, about the time concerns about the Delta variant were elevated. After marking an all-time low yield of 0.40% in March 2020, yields on the 10-year T-note are turning higher.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of commodities or commodity futures involves substantial risk and are not suitable for everyone.

Todd Hultman can be reached at .


To comment, please Log In or Join our Community .