Natural Gas Weekly Fundamental Analysis December 3 – 7, 2012, Forecast

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Updated: Aug 20, 2015, 23:00 UTC

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

Natural Gas Weekly Fundamental Analysis December 3 - 7, 2012, Forecast

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 3.579 tumbling from its high 3.99 on Monday after breaking above the 4.00 price the prior week. Traders had pushed prices to record levels on increased demands and falling inventories. With colder temperatures predicted in the US earlier in the week, residential demand was expected to increase. The prior week usage was up, due to ongoing maintenance on nuclear power plants, as gas was used temporarily to fill supply and production demands. With usage returning to normal this week and traders booking profits at month end gas lost its leverage and tumbled to 3.57 down 42cents for the week.

Date	Last	Open	High	Low	Change %
Nov 30, 2012	3.579	3.654	3.679	3.547	-2.03%
Nov 29, 2012	3.654	3.803	3.814	3.643	-3.91%
Nov 28, 2012	3.802	3.875	3.888	3.737	-1.90%
Nov 27, 2012	3.876	3.881	3.913	3.846	-0.12%
Nov 26, 2012	3.880	3.985	3.990	3.842	-2.65%

The volume of natural gas needed to replace generation in the United States due to nuclear plant outages rose by an average 2.3 billion cubic feet per day (Bcf/d) through the first 28 days of November 2012 compared to the first 28 days of November 2011, according to estimates .

Working natural gas in storage rose last week to 3,877 billion cubic feet (Bcf) as of Friday, November 23, according to the U.S. Energy Information Administration’s weekly inventory. The natural gas rotary rig count rose to 428 last week, according to data released by Baker Hughes Incorporated on November 23. This represents an increase of 11 rigs from the previous week. The oil rig count fell by 2 to 1,388 active 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 November 26 – 30 actual v. forecast for Euro, GPB, the Franc, and USD

Date	Currency	Event	Actual	Forecast	Previous
Nov. 26	CHF	Employment Level	4.12M	4.09M	4.07M
	EUR	GfK German Consumer Climate	5.9	6.2	6.1
Nov. 27	GBP	Business Investment (QoQ)	3.7%	1.3%	0.9%
	GBP	GDP (QoQ)	1.0%	1.0%	1.0%
	GBP	GDP (YoY)	-0.1%	0.0%	0.0%
	USD	Core Durable Goods Orders (MoM)	1.5%	-0.5%	1.7%
	USD	Durable Goods Orders (MoM)	0.0%	-0.6%	9.2%
	USD	CB Consumer Confidence	73.7	73.0	73.1
Nov. 28	EUR	German CPI (MoM)	-0.1%	-0.1%	0.0%
	EUR	German CPI (YoY)	1.9%	1.9%	2.0%
	USD	New Home Sales	368K	390K	369K
Nov. 29	CHF	GDP (QoQ)	0.6%	0.2%	-0.1%
	GBP	Nationwide HPI (MoM)	0.0%	0.1%	0.6%
	EUR	German Unemployment Change	5K	15K	19K
	EUR	Italian 10-Year BTP Auction	4.45%		4.92%
	GBP	CBI Distributive Trades Survey	33	18	30
	USD	Initial Jobless Claims	393K	390K	416K
	USD	GDP (QoQ)	2.7%	2.8%	2.0%
	USD	Continuing Jobless Claims	3287K	3323K	3357K
	USD	Pending Home Sales (MoM)	5.2%	0.8%	0.4%
Nov. 30	EUR	French Consumer Spending (MoM)	-0.2%	-0.1%	0.1%
	CHF	KOF Leading Indicators	1.50	1.60	1.64
	EUR	CPI (YoY)	2.2%	2.4%	2.5%
	USD	Core PCE Price Index (MoM)	0.1%	0.2%	0.1%
	USD	Personal Spending (MoM)	-0.2%	0.2%	0.8%

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

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)

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

Date	Time	Currency	Event	Forecast	Previous
Dec. 03	08:15	CHF	Retail Sales (YoY)	4.1%	5.4%
	08:30	CHF	SVME PMI	47.0	46.1
	15:00	USD	ISM Manufacturing Index	51.3	51.7
Dec. 05	10:00	EUR	Retail Sales (MoM)	-0.1%	-0.2%
	13:15	USD	ADP Nonfarm Employment Change	125K	158K
	13:30	USD	Nonfarm Productivity (QoQ)	2.7%	1.9%
	13:30	USD	Unit Labor Costs (QoQ)	-0.9%	-0.1%
	15:00	USD	ISM Non-Manufacturing Index	53.5	54.2
Dec. 06	08:15	CHF	CPI (MoM)		0.1%
	09:30	GBP	Trade Balance	-8.8B	-8.4B
	10:00	EUR	GDP (QoQ)	-0.1%	-0.1%
	11:00	EUR	German Factory Orders (MoM)	0.9%	-3.3%
	12:00	GBP	Interest Rate Decision	0.50%	0.50%
	12:00	GBP	BOE QE Total	375B	375B
	12:45	EUR	Interest Rate Decision	0.75%	0.75%
Dec. 07	09:30	GBP	Industrial Production (MoM)	0.7%	-1.7%
	09:30	GBP	Manufacturing Production (MoM)	-0.2%	0.1%
	09:30	GBP	Industrial Production (YoY)	-0.6%	-2.6%
	11:00	EUR	German Industrial Production (MoM)	-0.5%	-1.8%