Natural gas prices spiked to fresh record highs in Europe, with US futures hit 14-year highs after a decision by Russia to cut natural gas supplies to Europe. 

Gas Prices

European natural gas prices surpassed $56 per million British thermal units, equating $324 a barrel.

Russian Decision

Russia's state-owned oil company Gazproom cut down supplies to Europe to nearly 20% of some major pipes capacity. 

It was an expected decision as Moscow continues to use energy supplies as weapons against Europe. 

European Suggestions 

The European Commission proposed that members cut down their natural gas use by 15% to ameliorate the situation.

Europe depended on Russia for 40% of supplies before the latest invasion of Ukraine. 

US Gas

Similarly, US natural gas futures spiked to 14-year highs yesterday as demand increases and global coal prices spike and temperatures rise as well.

It's expected that prices will rise by 70% in July, breaking September 2009 record of a 63% profit. 

Gold prices rose in European trade for the first time in three sessions as dollar declined against a basket of major rivals, ahead of the Federal Reserve's policy decisions.

Gold prices rose over 0.4% to %1,725 an ounce, after losing 0.2% yesterday, the second profit in a row under pressure from the dollar.

The Index

The dollar index fell over 0.3% on Wednesday, losing some of the stronger gains made yesterday against major rivals. 

A drop in dollar's value boosts gold futures in return as they become cheaper to holders of other currencies. 

The Fed

The Federal Reserve is expected to hike rates by 75 basis points today from 1.75% to 2.50%, followed by a press conference by Fed Chair Jerome Powell to explain the decision.

Estimates 

If Fed's decision came more bullish than expected, it'll impose high pressure on the precious metal and force it to give up trading above $1,700.

The SPDR 

Gold holdings at the SPDR Gold Trust remained flat yesterday at $1,005 an ounce, the lowest since January 20. 

Euro rose in European trade above one-week lows against dollar, amid mounting pressures on the common currency, including the fuel crisis in Europe, after Russia reduced natural gas exports to the continent. 

Dollar took a dip as well ahead of the Fed's policy decisions later today, expected to hike rates by 75 basis points. 

EUR/USD rose 0.4% on Wednesday to 1.0158, after closing down 1% yesterday, marking week lows at 1.0107 after Russia's decision to reduce natural gas exports to Europe. 

Fuel Crisis 

Russia increased pressure on gas supplies to Europe this year, cutting it to 20% of its total capacity to Germany. 

In turn, natural gas prices hit fresh record highs as Europe fails to find alternatives, with European authorities putting plans to restrict access to natural gas in private homes to just a few hours a day.

The Dollar

The dollar declined over 0.3% on Wednesday, losing most of its strong gains made yesterday against a basket of major rivals. 

The decision comes ahead of the crucial policy decisions by the Federal Reserve later today, expected to hike rates by 0.75% to 2.5%. 

Oil futures tilted higher as the dollar index backed off September 2002 highs, ahead of US data later today, including US crude stocks data, and the Federal Reserve's policy decisions.

As of 06:07 GMT, US crude futures due in August rose 0.21% to $95.80 a barrel, while Brent September futures rose 0.23% to $105.02 a barrel, as the dollar index shed 0.13% to 106.99.

From the US, durable goods orders are expected down 0.5%, compared to an 0.8% decline in May, while core sales are estimated up 0.2%. 

US goods trade deficit is expected down to $103.2 billion from $104.3 billion in May, while wholesale inventories are expected up 1.5%.

The Federal Reserve is expected to hike rates by 75 basis points today from 1.75% to 2.50%, followed by a press conference by Fed  Chair Jerome Powell to explain the decision.

Currently, two-year US treasury yields stand at 3.203%, while 10-year yields hit 2.954%, such divergence is usually indicative of upcoming recession.

It was confirmed last week that US President Joe Biden got a positive Covid 19 diagnosis, with light symptoms.

Medical officials in the US warned from a new Covid 19 wave in the US and worldwide, one that's particularly virulent, and asserting the pandemic isn't over yet.

China last reported 1,012 new Covid 19 infections last Wednesday, and it's the first time infections surpassed a thousand cases since May.

Europe recently allowed several state-owned Russian oil companies to sell their products to several members of EU countries, however the US is seeking to put a limit on prices of Russian oil.

Baker Hughes data last week showed US oil rigs steadied at 599 rigs, the highest since March 2020, while rising in June for the 23rd month in a row.

US oil output on the other hand declined 100 thousand bpd last week to 12 million bpd, off April 2020 highs.