Natural Gas Forecast December 20, 2011, Technical Analysis

The natural gas markets fell during the Monday session. The market fell as low as $3.05, and the downtrend continues to pressure the market lower. However, the larger picture has a consolidation from earlier this year between the $5 and $4 levels suggesting a $3 target. The move has been close enough for us, and as a result we are expecting some kind of decent bounce at this point. Also, being so close to the end of the year, there is also a high probability of traders taking profits now that we are at the end of the year.

The traders that have been short of this market have had a massively strong year, and in the overall market – profits like this are hard to give back. Because of this, there is a good chance we see this market rise as a short covering rally should be seen. Either way, the volume will be very light, and this always produces a chance of a super spike in markets like this. The entirety of all of these facts has us concerned about selling, but you cannot buy it based upon what it “might” do.

The natural gas markets still remain a “sell only” market for us as the US has over 14 Trillion Cubic Feet of proven reserves presently that aren’t even out of the ground yet. Because of this, it would take something pretty massive to have the market rise for any length of time. The markets will bounce of course, but as it has been in the past – it will more than likely continue to be so next year. However, as the professional traders all go on holiday for the end of the year, the markets will behave more and more erratically. The higher the market rises in any short covering rally should simply provide better profits being a seller next year.

With all of this in mind, we are sellers of natural gas, but at higher levels and look very forward to seeing this market bounce quite a bit as it will almost undoubtedly produce nice profits in the near future.

Natural Gas Forecast December 20, 2011, Technical Analysis
Natural Gas Forecast December 20, 2011, Technical Analysis

Natural Gas Forecast Dec. 20, 2011, Fundamental Analysis

Natural Gas Forecast Dec. 20, 2011, Fundamental Analysis
Natural Gas Forecast Dec. 20, 2011, Fundamental Analysis
, as the weather forecasts suggested temperatures will be warmer than normal, triggering speculation about less demand for the heating fuel through the beginning of January.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely higher than average over the coming period, and that could put natural gas prices under pressure next week.

Natural Gas Forecast for the Week of December 19, 2011

Natural gas continues to fall as the last week has seen quite the selloff in this obviously bearish market. The supply far outweighs the demand in this economy, and the technicals are obviously broken down. With this in mind, buying this market isn’t even an option. Selling at this level for a long-term trade might be a bit difficult as it is certainly oversold, but selling the rallies could be the way to go. We like selling any returns to the $3.50 level as well as $4 if we can rally that far. Selling at this level would simply be chasing the trade.

Natural Gas Forecast for the Week of December 19, 2011
Natural Gas Forecast for the Week of December 19, 2011

Natural Gas Forecast December 19, 2011, Technical Analysis

Friday saw the second quiet day in the natural gas pits in a row. The recent selloff has been brutal, and the market certainly needs to take a rest. With the holidays quickly approaching, the volume will shrink, and the markets could be prone to sudden spikes. Knowing this, we are very keen to sell those spikes as the show signs of slowing down. Also, we like selling rallies in general.

Natural Gas Forecast December 19, 2011, Technical Analysis
Natural Gas Forecast December 19, 2011, Technical Analysis

Natural Gas Weekly Forecast December 19-23, 2011, Fundamental Analysis

Natural Gas Weekly Forecast December 19-23, 2011, Fundamental Analysis
Natural Gas Weekly Forecast December 19-23, 2011, Fundamental Analysis
, as warmer than expected weather conditions boosted speculations of falling demand for natural gas as a heating fuel. While the EIA report showed natural gas inventories decreased by 102 billion cubic feet, below estimates of a decrease by 92 billion cubic feet.

Traders will be focused on the weather forecasts, as warm weather conditions are expected to weigh down on demand for natural gas, and that could push prices lower since demand for the heating fuel would decrease accordingly.

Highlights for this week that will probably affect the Natural Gas direction are:

Thursday December 22:

At 15:30 GMT, The EIA will release the weekly natural gas storage change for the week ending December 16, where the prior report showed that natural gas inventories decreased by 102 billion cubic feet.

Natural Gas Forecast Dec. 19, 2011, Fundamental Analysis

Natural Gas Forecast Dec. 19, 2011, Fundamental Analysis
Natural Gas Forecast Dec. 19, 2011, Fundamental Analysis
, as the weather forecasts suggested temperatures will be above the average in the Eastern and Central of theUnited Statesfor the next 10 days, fueling speculations of falling demand for natural gas as a heating fuel and putting prices under negative pressure as a result.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely higher than average over the coming period, and that could put natural gas prices under pressure next week.

Natural Gas Forecast December 16, 2011, Technical Analysis

Natural gas markets fell again on Thursday after first rising. This shows just how weak the markets are and the trend are certainly still intact. The market has been overwhelmingly bearish over the last several months, and looks to continue to be so. The supply is far too great for the demand, so selling is the only thing to do. We sell rallies and a break of the lows from the Thursday session as it formed a shooting star, which of course is bearish.

Natural Gas Forecast December 16, 2011, Technical Analysis
Natural Gas Forecast December 16, 2011, Technical Analysis

Natural Gas Forecast Dec. 16, 2011, Fundamental Analysis

Natural Gas Forecast Dec. 16, 2011, Fundamental Analysis
Natural Gas Forecast Dec. 16, 2011, Fundamental Analysis
after the EIA report showed that natural gas stockpiles decreased by 102 billion cubic feet, compared with the prior decrease of 20 billion cubic feet, and below median estimates for an decrease by 92 billion cubic feet, which provided natural gas prices with bullish momentum.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be warmer than average over the coming period, and that could provide natural gas prices with bearish momentum.

Unstable Markets as Sentiment is Fragile and Data Disappoint

Markets remain under pressures although some correction was seen this morning following the sharp losses suffered yesterday. Concerns over the outlook of the European debt crisis will persist today after Fitch downgraded five major European banks.

Yesterday yields on Italian 2-year bonds rose to a record high of 6.47%, the highest since 1997, while German yields fell to 0.29% highlighting that traders are heavily targeting safer investments as the global economic growth is being further damaged by the European debt crisis.

Investors may continue to avoid riskier assets and head towards the safe haven USD and treasuries, whereSpainsold today 6 billion euros of bonds far surpassing a target of 3.5 billion euros as demand proved to be very solid. The bonds were sold at a lower average yields than the previous auction.

Fitch downgraded yesterday five major European banks including Banque Federative du Credit Mutuel, Credit Agricole, Danske Bank, OP Pohjola Group and Rabobank Group, and warned of a “broader phenomenon of stronger headwinds facing the banking industry as a whole”.

AsEurope’s economy is likely to slip back into a recession while downgrade risks by major rating agencies remain high, sentiment continues to be fragile. Thereby Asian stocks dropped further today with the MSCI Asian pacific Index falling 1.8% at 16:20 inTokyo.

In Europe stocks opened higher, where FTSE 100 gained 0.62% while DAX rose 1.11% mainly as a technical correction, after the sharp losses seen since Monday. Yet this rally is likely to be short-lived since European leaders failed to adopt a last solution to the debt crisis.

Economic data confirms the slowdown seen in global growth; in Japan the Tankan index of sentiment among large manufacturers fell more than expected; in China the foreign direct investment dropped for the first time since 2009 and the preliminary PMI manufacturing showed the sector may contract a 2nd month.

In Europe and Germany the services and manufacturing PMI improved slightly in Dec., yet employment fell during Q3 inEuropeby -0.1%. InU.K.retail sales dropped considerably in Nov. from the previous month. Switzerland held the interest rate steady at 0.0%, while the industrial production fell by -1.4%.

Markets are eyeing today important economic data from theU.S., including the weekly jobless claims, the industrial production, the Net TIC flows, the current account, the PPI, NY empire manufacturing, as well asPhiladelphiafed index and finally the EIA natural gas storage change.

The euro is trading with some bullish momentum around the 1.3005 after Dec.’s manufacturing and services PMI rose in Germany and Europe. The pound also found some upside support, and is trading now around the 1.5520 level after the USDIX fell today towards the 80.30 level.

The yen is trading around the 77.85 level while the CHF is trading around the 0.9435 since demand on safe havens is still strong. The AUD is moving in a tight range around the 0.9915 as investors are still worries over the outlook of the European debt crisis.

Commodity markets were severely hit by the pessimism spread among traders this week. Oil fell below the $95.00 per barrel level after OPEC decided yesterday to increase daily production to 30 million barrels in order to avoid shortage of supplies and stabilize prices. Crude is now trading around $95.80 level.

Gold broke the $1600.00 level as inflation risks are easing while investors head for the safe haven USD. Yet commodities recovered some of the losses where gold is trading around the $1590.00 level, yet pressures may continue to be bearish as concerns over the outlook of the global economy persist.

Natural Gas Forecast December 15, 2011, Technical Analysis

The natural gas markets fell hard again on Wednesday as the market simply cannot get a boost at this point. The natural gas market is certainly oversold at this point, but we are not willing to try and catch this falling knife. The rallies in this market will continue to offer us selling opportunities in this arena, and as such – we are willing to be patient and wait on an attempt to rally into resistance, perhaps to the $3.50 area, or even $3.25 as it is the spot where we gapped lower. The breaking of the lows on Wednesday could also offer another sell signal.

Natural Gas Forecast December 15, 2011, Technical Analysis
Natural Gas Forecast December 15, 2011, Technical Analysis

Natural Gas Forecast Dec. 15, 2011, Fundamental Analysis

Natural gas prices dropped to a two years low on Wednesday, as the weather forecasts suggested temperatures will be above the average in the Eastern and Central of the United States for the next 10 days, fueling speculations of falling demand for natural gas as a heating fuel and putting prices under negative pressure as a result.

Traders will be following the EIA report closely on Thursday, where inventories are likely to provide prices with bullish momentum. Also, traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be warmer than average over the coming period, and that could provide natural gas prices with bearish momentum.

Thursday December 15:

At 15:30 GMT, The EIA will release the weekly natural gas storage change for the week ending December 09, where expectations show that natural gas stockpiles decreased by 90 billion cubic feet, compared with the previous decrease by 20 billion cubic feet.

Iran Plays Their Trump Card – Oil Surges

A leading member of Iranian parliament’s National Security Committee said that the military was set to practice its ability to close the Gulf to shipping at the narrow Strait of Hormuz, the most important oil transit channel in the world, but there was no official confirmation.

By volume, the Strait of Hormuz leading out of the Persian Gulf and the Strait of Malacca linking the Indian and Pacific Oceans are the two most strategic chokepoints.

The global energy market is dependent upon reliable transport. The blockage of a chokepoint, even temporarily, can lead to substantial increases in total energy costs. In addition, chokepoints leave oil tankers vulnerable to theft from pirates, terrorist attacks, and political unrest in the form of wars or hostilities as well as shipping accidents which can lead to disastrous oil spills.

Located between Oman and Iran, the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Hormuz is the world’s most important oil chokepoint due to its daily oil flow of 15.5 million barrels in 2009, down from a peak of 17 million bbl/d in 2008. Flows through the Strait in 2009 are roughly 33 percent of all seaborne traded oil (40 percent in 2008), or 17 percent of oil traded worldwide.

On average, 13 crude oil tankers per day passed eastbound through the Strait in 2009 (compared with an average of 18 in 2007-2008), with a corresponding amount of empty tankers entering westbound to pick up new cargos. More than 75 percent of these crude oil exports went to Asian markets, with Japan, India, South Korea, and China representing the largest destinations.

At its narrowest point, the Strait is 21 miles wide, but the width of the shipping lane in either direction is only two miles, separated by a two-mile buffer zone. The Strait is deep and wide enough to handle the world’s largest crude oil tankers, with about two-thirds of oil shipments carried by tankers in excess of 150,000 deadweight tons.

Closure of the Strait of Hormuz would require the use of longer alternate routes at increased transportation costs. Alternate routes include the 745 mile long Petroline, also known as the East-West Pipeline, across Saudi Arabia from Abqaiq to the Red Sea. The East-West Pipeline has a nameplate capacity of 4.8 million bbl/d. The Abqaiq-Yanbu natural gas liquids pipeline, which runs parallel to the Petroline to the Red Sea, has a 290,000-bbl/d capacity.

Last month Iran’s energy minister told Al Jazeera television last month that Tehran could use oil as a political tool in the event of any future conflict over its nuclear program.

Oil surged nearly $4 a barrel on Tuesday in a furious burst of trading that traders struggled to explain, citing renewed jitters over Iran’s comments. Brent and U.S. crude prices shot up quickly briefly adding $3 on to earlier gains as volumes surged.

This sudden rise in oil prices could effectively stop the slow growth witnessed recently in the US. The US economy is fragile and any increased expense would hurt the consumer, as well as the manufacturer. Increases in oil prices lead almost immediately to increases at the pump. This could cause inflation to surge.

Even though the US, this past fall became an oil exported as opposed to an oil importer, any price increases serve to destabilize the markets and compound nervous investors. An increase in oil prices would also hurt the EU and the UK. Iran has played their trump card, now we have to wait to see exactly how government sanctions and embargo are implemented against Iran over their nuclear program.

Natural Gas Forecast December 14, 2011, Technical Analysis

Natural gas continues to be a very weak market as traders simply cannot get this market to rise for any length of time. However, we have a gap from two days ago, and gaps due tend to get filled. Once this happens though, we think the bearish momentum will continue in this market as the demand cannot keep up with supply, even in the dead of winter in the northeastern United States. We are sellers of rallies at this point.

Natural Gas Forecast December 14, 2011, Technical Analysis
Natural Gas Forecast December 14, 2011, Technical Analysis

Natural Gas Forecast Dec. 14, 2011, Fundamental Analysis

Natural gas prices fluctuated on Tuesday, as the weather forecasts suggested temperatures will be above the average in the Eastern and Central of the United States, fueling speculations of falling demand for natural gas as a heating fuel and putting prices under negative pressure as a result.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely higher than average over the coming period, and that could put natural gas prices under pressure next week.

Natural Gas Forecast December 13, 2011, Technical Analysis

The natural gas markets have been immensely bearish over the last couple of years. The most recent action has seen acceleration to the downside, and Monday only exacerbated this. The gap down and the lack of pullback are extremely bearish for this market, and the gap could even find itself as massive resistance going forward.

With this in mind, we are willing to continue selling this market until we recapture the $4 mark, something that looks highly unlikely at this point. The market is a “sell only” one, and with that being said, we love selling rallies, and with this newest gap, we could even sell here. There is absolutely no way we could be convinced to buy at this point.

Natural Gas Forecast December 13, 2011, Technical Analysis
Natural Gas Forecast December 13, 2011, Technical Analysis

Natural Gas Forecast Dec. 13, 2011, Fundamental Analysis

Natural gas prices dropped on Monday, as the U.S. dollar strengthened and the weather forecasts suggested temperatures will be above the average in the Eastern and Central of theUnited States, fueling speculations of falling demand for natural gas as a heating fuel and putting prices under negative pressure as a result.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely higher than average over the coming period, and that could put natural gas prices under pressure next week.

Natural Gas Forecast for the Week of Dec. 12th, 2011, Technical Analysis

One of the easiest trades over the last several months has been to short the natural gas markets, and this trend looks as if it will continue. The breaking below the $3.50 mark is a very bearish sign, and it looks as if the next leg down in this market has started. The market should be firmly below the $4 mark for the long run now, and this breaking down leads us to the target price of $3 before it is all said and done. Although there will be bounces, we sell them all as this trend continues to the downside.

Natural Gas Forecast for the Week of Dec. 12th, 2011, Technical Analysis Natural Gas Forecast for the Week of Dec. 12th, 2011, Technical Analysis

Natural Gas Forecast Dec. 12th, 2011, Technical Analysis

Natural Gas markets broke down on Friday as the shooting star from Thursday that had us looking for this move. The market continues to be very bearish, and buying isn’t even possible at this point. The rallies have all been selling opportunities, and this latest fight to get back up to the $3.75 level shows just how weak this market is. The $3.50 level should be considered as resistance now, and we are looking to sell the next rally, especially if it fails in that area.

Natural Gas Forecast Dec. 12th, 2011, Technical Analysis Natural Gas Forecast Dec. 12th, 2011, Technical Analysis

Natural Gas Forecast Dec. 12, 2011, Fundamental Analysis

Natural gas prices dropped on Friday, as weather forecasts suggested temperatures will be above the average in the Eastern and Central of theUnited States, fueling speculations of falling demand for natural gas as a heating fuel and putting prices under negative pressure as a result.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely higher than average over the coming period, and that could put natural gas prices under pressure next week.

Natural Gas Weekly Forecast December 12-16, 2011, Fundamental Analysis

Natural gas prices fell last week, as warmer than expected weather conditions boosted speculations of falling demand for natural gas as a heating fuel. While the EIA report showed natural gas inventories decreased by 20 billion cubic feet, below estimates of a decrease by 12 billion cubic feet. Nonetheless, natural gas prices closed the week lower after rising on Thursday.

Traders will be focused on the weather forecasts, as warm weather conditions are expected to weigh down on demand for natural gas, and that could push prices lower since demand for the heating fuel would decrease accordingly.

Highlights for this week that will probably affect the Natural Gas direction are:

Thursday December 15:

At 15:30 GMT, The EIA will release the weekly natural gas storage change for the week ending December 09, where the prior report showed that natural gas inventories decreased by 20 billion cubic feet.