UK Natural Gas Extends Rebound

Agricultural commodities are mixed, with wheat declining 0.6% to $5.19 a bushel but soybeans rising 1.4% to $10.66 a bushel. The U.S. and China have agreed to suspend most mutual tariffs pending further talks, driving soybeans' gains. China had imported the lowest amount of soybeans in April for ten years, Commerzbank analysts say in a note. According to data from the customs authority, April's soybean imports amounted to just over 6 million metric tons, an on-year decline of 29%. This was likely a result of the U.S.-China trade war, as soybeans from the U.S. became prohibitively expensive due to China's 140% counter-tariffs following U.S. levies, Commerzbank writes. The agreement to lower tariffs on U.S. goods to 10% for 90 days pending further negotiations has since raised hopes of increased soybean demand. (joseph.hoppe@wsj.com)

US natural gas futures rose to above $3.75 per MMBtu in mid-May, the highest in one month, amid increased demand for LNG and an outlook of robust demand domestically.

Forecasts of a hot North American summer gained ground by major forecasters, reflecting higher demand for gas-intensive air conditioning in households and businesses to extend the rebound since the start of the month.

Energy commodities were also higher after the US after the White House lowered tariffs on China for the next three months and de-escalated risks of an extended trade war.

The impact of the move on stronger foreign demand supported the LNG outlook for Asia and Europe amid their restocking season.

Meanwhile, the latest EIA data showed that gas in underground storage rose by 104 billion cubic feet (Bcf) last week, far above the 5-year average of 79 Bcf, due to mild weather and soft demand.

This pushed the surplus to 30 Bcf versus the average, though inventories remain 412 Bcf below last year.

European natural-gas prices rise as the European Union threatens new sanctions against Russia. The benchmark Dutch TTF contract rises 3.5% to 35.83 euros a megawatt hour. Ukraine's European allies have threatened fresh sanctions, including a permanent block on the Nord Stream 2 gas pipeline that connects Russia to Germany, if Russia doesn't agree to a 30-day ceasefire proposed by President Trump. The EU has already increased pressure on Russia by detailing plans to cut most energy imports from Russia by the end of 2027. At the same time, gas has also been boosted by a general risk-on market sentiment, as the U.S. and China agreed to substantially cut tariffs pending further talks. (joseph.hoppe@wsj.com)

European natural gas prices were above €35.7/MWh on Monday, holding gains from the previous week and tracking higher LNG prices amid increased buying competition with Asia and supply setbacks in the longer term.

The latest data reflected strong LNG bidding in India and robust buying from China, raising prices in European hubs as utilities continue restocking ahead of the summer.

Inventories in the continent were 40% full at the start of the month, compared with 62.7% in the corresponding period of last year.

The global outlook for LNG was supported by the de-escalation in the Chinese trade war with the United States, set to support power-hungry goods producers.

In turn, the EU announced that it will propose legal measures to phase out all imports of Russian gas and LNG by the end of 2027, in addition to a ban on all spot imports by the end of 2025.

This coincided with lawmakers voting to lower gas storage in the bloc to 83% by the start of the winter season from the current 90%.

Base metal prices rise as the U.S. and China agree to substantially cut tariffs pending further talks, with LME three-month copper up 0.8% at $9,515.50 a metric ton and LME three-month aluminum up 2% at $2,465.9 a ton. According to a joint statement, President Trump's "reciprocal" tariffs on China will fall to 10% from 125%, and China will likewise cut tariffs on U.S. goods to 10% from 125% for 90 days. Base metals have ridden the resultant wave of positive market sentiment, as the tariff reductions lift the global economic outlook and raise demand expectations. Previously, forecasters had lowered China's growth outlook, given the effects of punitively high U.S. tariffs on Chinese goods. (joseph.hoppe@wsj.com)

Silver prices dropped over 2% to below $32 per ounce on Monday, reversing last week’s gains as appetite for safe-haven assets diminished following a major breakthrough in U.S.-China trade relations.

Over the weekend, both nations agreed in Switzerland to significantly reduce tariffs, easing geopolitical tensions and fueling optimism across global markets.

Under the preliminary deal, U.S. tariffs on Chinese goods will be cut from 145% to 30%, while China will lower its duties on U.S. imports from 125% to 10%.

The improved risk sentiment, further bolstered by a fragile but holding ceasefire between India and Pakistan, weighed on precious metals broadly.

However, the trade accord also boosted the longer-term outlook for silver’s industrial demand, particularly in the renewable energy sector where both the U.S. and China remain major players.