Natural Gas Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

Weekly Analysis and Recommendation:

Natural Gas soared this week gaining 7.71% this week to trade at 2.305. Natural gas is the second-most important commodity in the energy complex after crude oil, in terms of both volume and usage. In addition to being one of the most actively traded energy commodities, natural gas (or “natgas” as traders call it) has several important uses.

First, it’s an important component in electricity generation: Many electric power plants use natural gas alongside coal and, to a lesser extent, nuclear power to generate electricity. Second, it has many critical industrial applications and is a feedstock for important products such as plastics, fertilizer and even gasoline. Finally, natgas is a key commodity in many households; indeed, natgas is used for water heaters, stoves, furnaces and even barbecues.

Natural gas prices surged to a two-week high, as winter cold and shrinking inventories continue to drive steady gains. Gas has been weighed down by starting the winter with record-high storage levels. Unseasonably warm weather also has limited heating demand, though prices have started to rise as more cold and snow have arrived in recent weeks.

That pushed gas futures Friday above their 50-day average price, which helped make the day’s rally so big, said Donald Morton, senior vice president at Herbert J. Sims & Co., who runs an energy-trading desk. That level is often seen as a key barrier for the short-term traders who move based on price charts and momentum, and rallies can take off once they pass it, he added.

“The momentum is starting to change here,” he added.

The rally started Thursday after government data showed inventories shrank by 211 billion cubic feet in the week ended Jan. 22, which was 6 bcf more than expected.

The large weekly withdrawal helped shrink the oversupply of the fuel. Stockpiles now stand 16% above the five-year average for the week, down from a 17% surplus as of last week.

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.

Economic Events: (GMT)

WEEKLY

Natural Gas Weekly Update
Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)

Weekly Natural Gas Storage Report
Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)