Average energy prices in September increased by around 5.4% and have been around 26.2% in the January-to-September period compared with the previous year. In September, the Henry Hub natural gas index was up by 9cent, or 2.7%, to $2.96/mmbtu, after trading at an average of $2.88/mmbtu the previous month. The US Energy Information Administration said utilities added 42 bcf of working gas to underground storage during the week ending 29 September 2017. This was below the median 47 bcf injection expected by analysts. Total working gas in underground storage stood at 3,508 bcf, 4.4% lower than at the same time the previous year, and 0.2% lower than the previous five-year average. During the month, the US Climate Prediction Centre (CPC) issued a La Nina watch with a 55%-60% chance of occurrence in the Northern Hemisphere during fall-winter 2017/2018. This phenomenon is normally associated with colder winter conditions in some regions of the country, and if it materializes, it would be supportive of natural gas demand. Natural gas prices in Europe advanced with average prices increasing by 4.4% to $5.51/mmbtu. Natural gas inventories for EU Member States increased to 84.6% full at the end of September from 76.7% the previous month, though last year’s end-of-September inventories were at 90.3%, according to data from Gas Infrastructure Europe. Australian thermal coal prices advanced on average by 1.0% to $96.9/Mt, though they declined in the second half of the month following readings of industrial production and fixed asset investments in China in August that were below market expectations. However, raw coal output in China decelerated in August to 4.1% higher y-o-y versus 8.5% higher y-o-y in July, and further output cuts due to environmental regulation could provide support in the winter months.
During the month, average base metal prices increased by 2.4%, partly due to baseline effects from the previous month. Metal prices are on average around 25% higher year-to-date, compared to the same period last year, and continue to show the best performance among the commodity groups since the beginning of the year. However, the metals rally that started in June stalled for some group components.
Copper inventories in the London Metal Exchange rose by around 30%, while the aforementioned deceleration in industrial production and fixed asset investment in China in August weighed on prices. Nonetheless, on the positive side, manufacturing surveys continued to signal resilient global manufacturing. The JP Morgan global manufacturing Purchasing Managers’ Index (PMI) stayed unchanged at a 75-month high of 53.1 in September, thanks to further improvements in activity in the US and the Eurozone, providing support to metal prices at the beginning of October. Meanwhile, amid geopolitical uncertainty and the potential impact of the hurricane season on the US economy, gold prices reached their highest level since July 2016. However, as those concerns receded and the Fed left the door open for an additional rate hike this year, gold prices lost around 5% from their peak.