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Natural Gas Weekly Fundamental Analysis September 16-20, 2013 ForecastIntroduction: 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 surprised traders this week closing new near the weekly high of 3.675 after EIA weekly inventories showed a climb in demand. The commodity closed at 3.675 climbing from the opening on Monday at 3.546 adding almost 13 cents for the week. The US approved a 4th major gas export project this week while the Obama Administration chastised the DOE and Energy Administration for dragging their feet on approvals.
Gas rose 1.1 percent as forecasters including Commodity Weather Group LLC in Bethesda, Maryland, predicted above-normal temperatures from the Midwest to Texas next week. Highs this week in Chicago, New York and Washington topped 90 degrees Fahrenheit (32 Celsius).
Natural gas inventories rose 65 billion cubic feet last week to 3.253 trillion, above-the five-year average gain of 62 billion for the period, EIA data show. Analyst estimates compiled by Bloomberg forecast an advance of 68 billion. A surplus to the five-year average held at 1.4 percent for a second week. Supplies were 5 percent below year-earlier inventories, compared with 6.2 percent the previous seven days.
Storms in the Gulf of Mexico, which includes the bay, tend to be closely watched because of their proximity to oil and natural gas producing and refining. The Gulf is home to about 5.6 percent of U.S. gas output. In the Atlantic, Tropical Depression Gabrielle was moving north-northeast with maximum sustained winds of 35 mph on track to the Canadian Maritime provinces, the hurricane center said.
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.
Historical: From 2011 to Present
Highest: 4.612 on Jul 18, 2011
Average: 3.307 over this period
Lowest: 1.902 on Apr 20, 2012
Economic Events: (GMT)
WEEKLY
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