Natural Gas Weekly Fundamental Analysis February 25 – March 1, 2013, 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 is trading at 3.291 holding in a tight range this week between 3.178 and 3.291 a movement of just about 10 cents. With winter days easing by and weather remaining close to seasonal forecasts there is little demand to help increase the current price level. This week’s inventory should have helped support prices with inventories coming in below forecast but had little effect. The US dollar is extremely strong but has not weighed on this commodity.

Natural gas futures advanced in New York, capping the first weekly increase since mid-January, on speculation that a cold end to the U.S. heating season will boost demand. Gas rose 1.4% as MDA Weather Services said freezing weather will sweep through the central U.S. next week and into the East over the next 11 to 15 days, while the West turns warmer. Bursts of cold this winter have helped reduce U.S. inventories that rose to an all-time high in November.

Natural gas for March delivery increased 4.5 cents to $3.291 per million British thermal units on the New York Mercantile Exchange, settling higher for the third time in four days. Trading volume was 31 percent below the 100-day average at 2:44 p.m. The futures rose 4.4 percent this week, posting the first gain in five weeks. Gas is up 25 percent from a year ago.

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 February 18-22 actual v. forecast for Euro, GPB, the Franc, and USD

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

Upcoming Government Bond

Date Time Country 

Feb 25 10:10 Italy  

Feb 25 10:30 Germany 

Feb 25 11:30 Belgium 

Feb 25 18:00 US 

Feb 26 10:10 Italy  

Feb 26 15:30 UK 

Feb 26 18:00 US 

Feb 27 10:10 Italy  

Feb 27 15:30 Sweden 

Feb 27 18:00 US 

Feb 28 01:30 Japan