Natural Gas Weekly Fundamental Analysis July 23-27, 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 continues to surprise speculators soaring above 3.00 this week. This is an all important price as many producers have cut production as NG is not profitable when it is under the 3.00 level.






Change %

Jul 20, 2012






Jul 19, 2012






Jul 18, 2012






Jul 17, 2012






Jul 16, 2012






Price was supported by demand this week as the US Midwest is suffering from a terrible drought and AccuWeather released reports showing that June was the hottest month of June in history and July was following that path. Therefore the fundamentals supported the increase in prices.

The EIA inventory showed an increase in stocks, but not a significant increase.

The national weather forecast calls for extremely high temperatures over the next two weeks as well as several storms brewing that could turn into hurricanes.

Everything keeps supporting prices. At some point investors are going to turn and take profits and we will see prices drop that might be as early as Monday with the increases the commodity has shown in the past few days.

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.


Highest: 6.106 on Jan 07, 2010

Average: 3.989 over this period

Lowest: 1.903 on April 19, 2012


Economic Events: (GMT)


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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

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