Natural Gas Monthly Fundamental Forecast October 2012

Outlook and Recommendation

Natural Gas soared to recent highs at the end of the month, bouncing from the mid 2.00 range to as high as 3.329 to close the week, month and quarter at 3.313.

Japan one of the world’s largest importers of Natural Gas since the tsunami destroyed their nuclear energy production forecast an increase of 14% helping push prices upwards this month

The drilling process called hydraulic fracturing, or fracking, is shaking up world energy markets from Washington to Moscow to Beijing. Some predict what was once unthinkable: that the U.S. won’t need to import natural gas in the near future, and that Russia could be the big loser.

Russia had been exporting vast quantities to Europe and other countries for about $10 per unit, but the current price in the U.S. is now about $3 for the same quantity. That kind of math got the attention of energy companies, and politicians, around the world.

Some European governments began to envision a future with less Russian natural gas. In 2009, Russia had cut off gas shipments via Ukraine for nearly two weeks amid a price and payment dispute, and more than 15 European countries were sent scrambling to find alternative sources of energy.

The U.S. presidential campaigns have already addressed the strategic potential.

A campaign position paper for Republican Mitt Romney said he “will pursue policies that work to decrease the reliance of European nations on Russian sources of energy.”

In early September, President Barack Obama said the U.S. could “develop a hundred-year supply of natural gas that’s right beneath our feet,” which would “cut our oil imports in half by 2020 and support more than 600,000 new jobs in natural gas alone.”

Natural Gas Inventory Report (EIA)

Working gas in storage was 3,576 Bcf as of Friday, September 21, 2012, according to EIA estimates. This represents a net increase of 80 Bcf from the previous week. Stocks were 296 Bcf higher than last year at this time and 282 Bcf above the 5-year average of 3,294 Bcf. In the East Region, stocks were 75 Bcf above the 5-year average following net injections of 46 Bcf. Stocks in the Producing Region were 159 Bcf above the 5-year average of 994 Bcf after a net injection of 29 Bcf. Stocks in the West Region were 48 Bcf above the 5-year average after a net addition of 5 Bcf. At 3,576 Bcf, total working gas is above the 5-year historical range.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

October Major Economic Events

WEEKLY

• This Week in Petroleum
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• Gasoline and Diesel Fuel Update
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• Weekly Petroleum Status Report
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• Heating Oil & Propane Update (October-March)
  Heating Oil, Propane Residential and Wholesale Price Data
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• Weekly Coal Production
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• Weekly NYMEX Coal Futures
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•  Coal News & Markets
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• Natural Gas Weekly Update
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• Weekly Natural Gas Storage Report
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