Natural Gas Weekly Fundamental Analysis September 10-14, 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 ended the week at 2.688 down a considerable amount, while commodities rallied around after the news from the ECB on their new bond buying program and negative results from the US jobs report gave a boost to the possibility of stimulus from the Feds at the meeting this week.

Date

Last

Open

High

Low

Change %

Sep 07, 2012

2.688

2.741

2.764

2.671

-2.01%

Sep 06, 2012

2.743

2.797

2.854

2.735

-1.98%

Sep 05, 2012

2.798

2.864

2.868

2.780

-2.25%

Sep 04, 2012

2.862

2.794

2.885

2.763

2.42%

Sep 03, 2012

2.795

2.804

2.805

2.775

-0.34%

The EIA weekly inventory showed a larger than expected surge in stocks, while weather forecast are for mild temperatures, lowering the demand for NG. While the USD has weakened offsetting the lower demand. NG is just about neutral at this time.

Peak shut-in natural gas production in the Federal Offshore Gulf of Mexico (GOM) during Hurricane Isaac was about 3.2 billion cubic feet (Bcf) per day. Isaac was sufficiently powerful to force evacuation of 85% of production platforms and shut-in 73% of GOM natural gas production (at peak). However, Isaac’s impact on overall U.S. natural gas production was relatively modest, representing only 4.7% of average daily natural gas production in 2012.

While the shut-ins associated with Isaac represented a significant portion of GOM production, the impact on the domestic market was less severe than it might have been in the past because GOM production represents a smaller portion of total U.S. production today than 5 to 10 years ago due to the dual effect of waning GOM production and increasing onshore production

Working natural gas in storage rose last week to 3,402 Bcf as of Friday, August 31, according to the U.S. Energy Information Administration’s (EIA)Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 28 Bcf for the week moved storage levels 395 Bcf above year-ago levels.

The Baker Hughes Incorporated natural gas rotary rig count fell by 13 to 473 active units on the week ending August 31. The oil-directed rig count increased by 11 to 1419 units.

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.

Major Economic Events for the week of September 3-7, 2012 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Time

Currency

Event

Actual

Forecast

Previous

Sep. 03 

08:15

CHF

Retail Sales (YoY) 

3.2%

4.3%

3.3%

 

08:30

CHF

SVME PMI 

46.7

49.0

48.6

 

08:45

EUR

Italian Manufacturing PMI 

43.60

45.00

44.30

 

08:50

EUR

French Manufacturing PMI 

46.0

46.2

46.2

 

08:55

EUR

German Manufacturing PMI 

44.7

45.1

45.1

 

09:00

EUR

Manufacturing PMI 

45.1

45.3

45.3

 

09:30

GBP

Manufacturing PMI 

49.5

46.2

45.2

Sep. 04

06:45

CHF

GDP (QoQ) 

-0.1%

0.2%

0.5%

 

08:00

EUR

Spanish Unemployment Change 

38.20K

 

-27.80K

 

15:00

USD

ISM Manufacturing Index 

49.6

50.0

49.8

 

15:40

GBP

Services PMI 

53.7

51.5

51.0

Sep. 05

08:15

CHF

CPI (MoM) 

0.0%

0.1%

-0.5%

 

10:00

EUR

Retail Sales (MoM) 

-0.2%

-0.2%

0.1%

 

10:35

EUR

German 10-Year Bund Auction 

1.420%

 

1.420%

 

13:30

USD

Nonfarm Productivity (QoQ) 

2.2%

1.8%

1.6%

 

13:30

USD

Unit Labor Costs (QoQ) 

1.5%

1.5%

1.7%

Sep. 06 

08:00

GBP

Halifax House Price Index (MoM) 

-0.4%

0.3%

-0.7%

 

10:00

EUR

GDP (QoQ) 

-0.2%

-0.2%

-0.2%

 

11:00

EUR

German Factory Orders (MoM) 

0.5%

0.2%

-1.6%

 

12:00

GBP

Interest Rate Decision 

0.50%

0.50%

0.50%

 

12:00

GBP

BOE QE Total 

375B

375B

375B

 

12:45

EUR

Interest Rate Decision 

0.75%

0.75%

0.75%

 

13:15

USD

ADP Nonfarm Employment Change 

201K

140K

173K

 

13:30

USD

Initial Jobless Claims 

365K

370K

377K

 

13:30

USD

Continuing Jobless Claims 

3322K

3315K

3328K

 

15:00

USD

ISM Non-Manufacturing Index 

53.7

52.5

52.6

Sep. 07

06:45

CHF

Unemployment Rate 

2.9%

2.9%

2.9%

 

09:30

GBP

Industrial Production (MoM) 

2.9%

1.5%

-2.4%

 

09:30

GBP

Manufacturing Production (MoM) 

3.2%

2.0%

-2.9%

 

09:30

GBP

PPI Input (MoM) 

2.0%

1.7%

0.4%

 

09:30

GBP

PPI Input (YoY) 

1.4%

1.2%

-2.4%

 

09:30

GBP

Industrial Production (YoY) 

-0.8%

-2.8%

-3.8%

 

11:00

EUR

German Industrial Production (MoM) 

1.3%

0.2%

-0.4%

 

13:30

USD

Average Hourly Earnings (MoM) 

0.0%

0.2%

0.1%

 

13:30

USD

Nonfarm Payrolls 

96K

125K

141K

 

13:30

USD

Unemployment Rate 

8.1%

8.3%

8.3%

 

13:30

USD

Average Weekly Hours 

34.4

34.5

34.4

 

13:30

USD

Private Nonfarm Payrolls 

103K

138K

162K

 

15:00

GBP

NIESR GDP Estimate 

0.2%

 

0.3%

Historical: From 2010 to Present

Highest: 6.106 on Jan 07, 2010

Average: 3.836 over this period

Lowest: 1.903 on April 19, 2012

 

Economic Events: (GMT)

WEEKLY

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