Natural Gas Weekly Fundamental Analysis September 24-28, 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 bounced around all week without making much headway. With the introduction of additional stimulus from the Bank of Japan, one of the world’s largest importers of Natural Gas, future demands may increase. NG closed the week at 2.900

Date

Last

Open

High

Low

Change %

Sep 21, 2012

2.900

2.817

2.900

2.791

3.00%

Sep 20, 2012

2.815

2.784

2.821

2.748

1.11%

Sep 19, 2012

2.784

2.775

2.853

2.737

0.34%

Sep 18, 2012

2.775

2.877

2.916

2.756

-3.56%

Sep 17, 2012

2.877

2.945

2.982

2.857

-2.33%

Temperatures for the week were fairly mild with no consumer demand for natural gas and there are some possible storms brewing in the Atlantic, as we remain in hurricane season, but nothing of a threatening nature.

This week’s EIA inventory showed the following:

Working gas in storage was 3,496 Bcf as of Friday, September 14, 2012, according to EIA estimates. This represents a net increase of 67 Bcf from the previous week. Stocks were 320 Bcf higher than last year at this time and 278 Bcf above the 5-year average of 3,218 Bcf. In the East Region, stocks were 76 Bcf above the 5-year average following net injections of 44 Bcf. Stocks in the Producing Region were 150 Bcf above the 5-year average of 974 Bcf after a net injection of 20 Bcf. Stocks in the West Region were 52 Bcf above the 5-year average after a net addition of 3 Bcf. At 3,496 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.

Major Economic Events for the week of September 17-21, 2012 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

Event

Actual

Forecast

Previous

Sep. 17

GBP

Rightmove House Price Index (MoM) 

-0.6%

 

-2.4%

 

USD

NY Empire State Manufacturing Index 

-10.4

-2.0

-5.8

Sep. 18

GBP

Core CPI (YoY) 

2.1%

2.2%

2.3%

 

GBP

CPI (YoY) 

2.5%

2.5%

2.6%

 

GBP

CPI (MoM) 

0.5%

0.5%

0.1%

 

EUR

German ZEW Economic Sentiment 

-18.2

-19.0

-25.5

 

EUR

ZEW Economic Sentiment 

-3.8

-16.5

-21.2

 

USD

Current Account 

-117.4B

-125.5B

-133.6B

 

USD

TIC Net Long-Term Transactions 

67.0B

45.3B

9.3B

Sep. 19  

USD

Building Permits 

0.803M

0.796M

0.811M

 

USD

Housing Starts 

0.750M

0.765M

0.733M

 

USD

Existing Home Sales 

4.82M

4.55M

4.47M

Sep. 20 

EUR

French Manufacturing PMI 

42.6

46.4

46.0

 

EUR

German Manufacturing PMI 

47.3

45.3

44.7

 

EUR

Manufacturing PMI 

46.0

45.4

45.1

 

GBP

Retail Sales (MoM) 

-0.2%

-0.4%

0.3%

 

GBP

Retail Sales (YoY) 

2.7%

2.7%

2.3%

 

EUR

Spanish 10-Year Obligation Auction 

5.666%

 

6.647%

 

GBP

CBI Industrial Trends Orders 

-8

-15

-21

 

USD

Initial Jobless Claims 

382K

375K

385K

 

USD

Continuing Jobless Claims 

3272K

3300K

3304K

 

USD

Philadelphia Fed Manufacturing Index 

-1.9

-4.0

-7.1

 

WEEKLY

 

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

Date

Time

Currency

Event

Forecast

Previous

 Sep. 24

09:00

EUR

German Ifo Business Climate Index 

102.3

102.3

 

09:00

EUR

German Current Assessment 

110.9

111.2

 

09:00

EUR

German Business Expectations 

95.0

94.2

Sep. 25

07:00

EUR

GfK German Consumer Climate 

5.9

5.9

 

15:00

USD

CB Consumer Confidence 

62.0

60.6

Sep. 26

01:00

EUR

German CPI (MoM) 

-0.1%

0.4%

 

01:00

EUR

German CPI (YoY) 

2.0%

2.1%

 

11:00

GBP

CBI Distributive Trades Survey 

5

-3

Sep. 27 

08:55

EUR

German Unemployment Rate 

6.8%

6.8%

 

08:55

EUR

German Unemployment Change 

10K

9K

 

09:30

GBP

Current Account 

-12.4B

-11.2B

 

09:30

GBP

GDP (QoQ) 

-0.5%

-0.5%

 

09:30

GBP

GDP (YoY) 

-0.5%

-0.5%

 Sep. 28 

07:45

EUR

French Consumer Spending (MoM) 

-0.2%

0.1%

 

08:00

CHF

KOF Leading Indicators 

1.55

1.57

 

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About: FX Empire Analyst - Barry Norman

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