Natural Gas Weekly Fundamental Analysis August 27-31, 2012 Forecast

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Introduction: Natural gas is nevertheless a major commodity in its own right, which is used for everything from cooking food to heating houses during the winter. Natural Gas is growing much faster than either of its non-renewable fossil fuel competitors, oil and coal.

Do not miss the weekly U.S. gas inventories report. The figures are issued by the Energy Information Administration (EIA) every Thursday afternoon at 15:30 (released Friday at 15:30 if there was a U.S. bank holiday on Monday). Here’s a link to the latest EIA report. The main natural gas moving figure in there is the change in inventories from the previous week. When it comes to the gas inventories report, we’re talking about billions of cubic feet, Bcf for short.

When the actual change in inventories number is released, it is the deviation from the expected number that is really important. If the actual inventories figure shows a 24 Bcf rise when an 84 Bcf increase was expected, then that is actually positive for the price of natural gas. All else equal, the price of natural gas should rise after the release.

A barrel of oil has roughly 6 times the energy content of natural gas. If the fuels were perfect substitutes, oil prices would tend to be about 6 times natural gas prices. However, due to various market characteristics discussed briefly above and the ease of using oil, the price of oil has been following a pattern of 8-12 times that of natural gas. However that ratio has spiked dramatically since March 2009.

Weekly Analysis and Recommendation:

Natural Gas opened on Monday at 2.699 and closed on Friday at 2.698. It saw a hectic week of ups and downs but on the whole ended up where it began. The EIA injection report this week showed an increase in inventory. Weather patterns seem to be holding at a comfortable temperature although there is a major storm brewing in the gulf which may affect prices.

Natural Gas prices may become more volatile in the coming weeks, as we move closer to the heart of the Atlantic hurricane season in September. A “weather” premium may be imbedded in prices, as many bearish traders are having a difficult time moving the October futures below 2.720, though a move above major resistance at 3.000 may be difficult unless we see a long-term shutdown of Gas production in the Gulf of Mexico due to storm damage

Date

Last

Open

High

Low

Change %

Aug 24, 2012

2.698

2.833

2.876

2.696

-4.80%

Aug 23, 2012

2.834

2.856

2.858

2.686

-0.79%

Aug 22, 2012

2.857

2.818

2.862

2.773

1.38%

Aug 21, 2012

2.817

2.772

2.836

2.704

1.60%

Aug 20, 2012

2.773

2.699

2.784

2.687

2.72%

 

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 up to the data analysis and information in our weekly reports.

Major Economic Events for the week of August 20-24, 2012 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

Event

Actual

Forecast

Previous

Aug. 20

GBP

Rightmove House Price Index (MoM) 

-2.4%

 

-1.7%

Aug. 21 

GBP

CBI Industrial Trends Orders 

-21

-8

-6

Aug. 22 

USD

Existing Home Sales 

4.47M

4.52M

4.37M

Aug. 23

CNY

Chinese HSBC Manufacturing PMI 

47.80

 

49.30

 

EUR

German GDP (QoQ) 

0.3%

0.3%

0.3%

 

EUR

German GDP (YoY) 

0.5%

0.5%

0.5%

 

EUR

French Manufacturing PMI 

46.2

43.6

43.4

 

EUR

German Manufacturing PMI 

45.1

43.4

43.0

 

EUR

Manufacturing PMI 

45.3

44.2

44.0

 

GBP

BBA Mortgage Approvals 

28.4K

28.2K

25.9K

 

GBP

CBI Distributive Trades Survey 

-3

15

11

 

USD

Initial Jobless Claims 

372K

365K

368K

 

USD

Continuing Jobless Claims 

3317K

3300K

3313K

 

USD

New Home Sales 

372K

365K

359K

Aug. 24

GBP

Business Investment (QoQ) 

-1.5%

2.8%

1.9%

 

GBP

GDP (QoQ) 

-0.5%

-0.5%

-0.7%

 

GBP

GDP (YoY) 

-0.5%

-0.6%

-0.8%

 

USD

Core Durable Goods Orders (MoM) 

-0.4

0.5%

-1.4%

 

USD

Durable Goods Orders (MoM) 

4.2

2.4%

1.3%

Historical:

Highest: 6.106 on Jan 07, 2010

Average: 3.989 over this period

Lowest: 1.903 on April 19, 2012

 

WEEKLY

 

Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD

Date

Time

Currency

Event

Previous

 Aug. 27

09:00

EUR

German Ifo Business Climate Index 

103.3 

 

09:00

EUR

German Current Assessment 

111.6 

 

09:00

EUR

German Business Expectations 

95.6 

Aug. 28

07:00

EUR

GfK German Consumer Climate 

5.9 

 

15:00

USD

CB Consumer Confidence 

65.9 

Aug. 29

01:00

EUR

German CPI (MoM) 

0.4% 

 

01:00

EUR

German CPI (YoY) 

1.7% 

Government Bond Auctions

Date  Time  Country 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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