Isaac Upgraded to Hurricane Drives Crude Prices

Oil futures prices for the month of October Delivery are hovering below $95/bbl with loss of almost 0.50 percent in electronic platform currently. Crude oil futures closed higher after a very range-bound session, as traders feared the impact of Hurricane Isaac on the Gulf of Mexico’s oil production. Isaac strengthened into a Category 1 hurricane and was expected to reach the coast of Louisiana today. A Group of Seven finance ministers issued a statement saying they were ready to call on the IEA to take appropriate action to ensure the market was fully supplied and that they remain vigilant toward risks to the global economy posed by elevated oil prices.

Crude oil inventories rose 5.5mn barrels, gasoline stocks declined 2.4mn barrels and inventories of distillates rose 1.4mn barrels, in the week ended Aug. 24, as per the American Petroleum Institute. As per American Petroleum Institute, crude oil stocks have climbed up above 5 million barrels in the last week as imports have increased by more than 17 percent with continuous rising production.

The unexpected rise in oil stocks might have weigh on oil prices. As per National Hurricane Center, Hurricane Isaac is producing a dangerous storm surge along the northern Gulf Coast with rainfall. Companies halted 93 percent of oil production in the Gulf of Mexico as Isaac neared the coast of southeast Louisiana, the Bureau of Safety and Environmental Enforcement said. Six Louisiana refineries were shut, idling 6.7 percent of U.S. capacity, and three were running at reduced rates.

There is another storm forming in North Atlantic named KIRK. So, concern of supply disturbances may keep prices on higher side. The EIA is planning to release reserves to fulfill the demand if any scarcity happens. The US Energy department said, crude oil and gasoline stocks are likely to decline in the last week. Actual data will be released this evening. Ahead of the crucial inventory report markets are looking at Beige book release and US GDP data we may expect oil prices to trade in a positive trend though volatility can be seen in US session.

Currently, most of the Asian equities are heading towards the upside amid speculation of increasing GDP for the US economy.

Hope from ECB on easing and action is pushing the shared currency on higher side, ahead of Italy’s six month’s T-bill auction today and 7.5 billion euro tomorrow. Speculation of ECB buying bonds may cap the borrowing cost for nations in the region. Overall, we may expect oil futures to trade on a positive trend, though technical correction is expected in between.

At present natural gas futures are hovering above $2.604/mmbtu with loss of more than 0.30 percent from yesterday’s closing. Ahead of expiry day in international market, we may expect gas prices to remain under pressure due to increasing storage level expectation. As per US Energy department, natural gas storage is likely to increase by more than 63 bcf, which may weigh on prices. Although the fundamental concerns for crude oil also hold true for natural gas. Also the Energy Department has said that natural gas demand has been on the decline by more than 5 percent in the last week. 

Natural Gas Forecast August 29, 2012, Technical Analysis

The natural gas markets continued to fall on the Tuesday session, as the $2.70 level is in its rearview mirrors now. Looking at this chart, it is easy to see that the downtrend is starting to accelerate again, and as such we already are short of this market. In fact, we are looking to add on any slight bounces as we think the market is essentially pricing in a move down to the $2.30 level. With all this being said, we have absolutely no scenario where we go along of this market, as the downtrend has been so relentless over the last couple of years.

Natural Gas Forecast August 29, 2012, Technical Analysis
Natural Gas Forecast August 29, 2012, Technical Analysis

Natural Gas Fundamental Analysis August 29, 2012, Forecast

Analysis and Recommendations:

Natural Gas declined to trade at 2.682. The Gulf of Mexico accounts for more than 7 percent of US natural gas production. Most importantly, presence of active hurricane season with tropical storm Isaac has caused concern of supply tightening, as fears dissipated today, prices declined.  Ahead of hurricane Katrina’s seventh anniversary on 29 August, people in Gulf region are planning to evacuate and energy plants are likely to shut production for the time being. Concern of declining demand is there from Residential and commercial sector. As per US energy department, natural gas demand has been decline by more than 5 percent in the last week.

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 up to the data analysis and information in our weekly reports.

Economic Data August 28, 2012 actual v. forecast

Date

 

Currency

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Aug. 28

 

AUD

 

 

HIA New Home Sales (MoM) 

-5.6%

 

 

 

2.8% 

 

 

 

 

EUR

 

 

GfK German Consumer Climate 

5.9

 

5.9 

 

5.9 

 

 

 

 

USD

 

 

CB Consumer Confidence 

60.6

 

66.0 

 

65.4 

   

 

WEEKLY

Upcoming Economic Events that affect the CHF, EUR, GBP and USD 

Date

Time

 

Currency

 

 

Event

Forecast

 

Previous

 

 

Aug. 29

01:00

 

EUR

 

 

German CPI (YoY) 

1.8% 

 

1.7% 

 

 

 

08:00

 

CHF

 

 

KOF Leading Indicators 

1.50 

 

1.43 

 

 

 

13:00

 

EUR

 

 

German CPI (MoM) 

0.2% 

 

0.4% 

 

 

 

13:30

 

USD

 

 

GDP (QoQ) 

1.7% 

 

1.5% 

 

 

 

15:00

 

USD

 

 

Pending Home Sales (MoM) 

1.0% 

 

-1.4% 

 

 

 

19:00

 

USD

 

 

Beige Book 

         

Government Bond Auctions

Date Time Country 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

Hurricane Isaac Weighs on Crude Oil Prices

Crude oil futures declined on Monday, while gasoline futures rallied as Tropical Storm Isaac threatened the heart of the refinery industry in the Gulf of Mexico. Brent crude oil futures fell toward $112 per barrel, reversing from early gains as Tropical Storm Isaac shuttered refineries on the US Gulf Coast, which reduced demand for crude. Tropical Storm Isaac churned across the Gulf of Mexico and headed for the Louisiana refining hub, prompting U.S. energy companies to start shutting refineries ahead of the storm and raising prospects for a jump in crude oil stocks. The storm is expected to make landfall by Wednesday.

During Tuesday morning’s Asian session, oil futures prices are hovering above $95.30/ bbl in electronic platform with loss of more than 0.10 percent. Most of the Asian equities are trading down after world third largest energy consumer/ economy Japan have downgraded its economy through self assessment.

There are no economic releases from Europe today. Ahead of coming Friday and Saturday’s Economic Symposium and Fed Chairman Bernanke’s address global market is likely to remain volatile with a doubt of further easing by Central Banks.

Upcoming in the US , monthly unemployment and payrolls along with consumer confidence and housing prices numbers are yet to come which is an important parameter for Central bank for deciding easing. Markets are worried that the better than expected eco data that  Fed chairman Bernanke may not hint on easing in his Jackson Hole speech on Friday.

Germany’s Bundesbank is not in support for ECB bond buying program may continue to weigh on the shared currency. Oil futures may take negative cues out of it.

However, US economic releases in the form of consumer confidence and manufacturing index improvement can create a spike in oil prices in the US session. Most importantly, presence of an active hurricane season with tropical storm Isaac is likely to create concern of supply tightening which may support oil prices to trade high.

U.S. crude-oil prices reversed course Monday, tumbling as speculation about a release of strategic petroleum reserves trumped concerns about Tropical Storm Isaac’s path into the oil-producing areas of the U.S. Gulf Coast. Crude-oil and gasoline futures aimed higher as Tropical Storm Isaac passed over the Florida Keys and into the Gulf of Mexico. But concerns of Isaac’s toll on production quickly turned to the potential for a release of oil from strategic reserves. In recent days news reports said that the White House is considering a release due to the latest rally in oil prices towards $100 a barrel in the U.S. and $120 a barrel overseas.

Ahead of hurricane Katrina’s seventh anniversary on 29 August, people in Gulf region are planning to evacuate and energy plants are likely to shut production for the time being. As per US Energy department, crude oil stocks are likely to fall along with gasoline but in a slower pace than prior week as refiners capacity utilization is likely to contract in active hurricane season. Overall, trend for the day is looking bearish till European session, whereas a spike is expected in the US session.

Unexpected move by storm Isaac may change the price direction however.

Gas futures are hovering above $2.657/mmbtu with gain of more than 0.20 percent from yesterday’s closing. The Gulf of Mexico accounts for more than 7 percent of US natural gas production.

 But concern of declining demand is there from Residential and commercial sector. As per US energy department, natural gas demand has been decline by more than 5 percent in the last week.

Natural gas fell to a 2-month low, on speculation that production cuts in the Gulf of Mexico because of Tropical Storm Isaac will do little to ease a supply glut.

Natural Gas Forecast August 28, 2012, Technical Analysis

The natural gas markets fell hard during the Monday session as the $2.70 level finally gave way. The breaking of the support area should lead to much lower prices, and we see prices heading to the $2.30 level before too long. Because of this, we are more than willing to sell at this point in time if we manage a break below the lows from the Monday session. As for buying, we haven’t been able to suggest This for quite some time, and it looks like that will continue to be the case.

Natural Gas Forecast August 28, 2012, Technical Analysis
Natural Gas Forecast August 28, 2012, Technical Analysis

Natural Gas Fundamental Analysis August 28, 2012, Forecast

Analysis and Recommendations:

Natural Gas dipped today to trade at 2.702 down 0.0.32. Prices eased as the tropical storm threat in Gulf region began to dissipate. The Gulf of Mexico accounts for more than 7 percent of US natural gas production. As per National Hurricane Centre, tropical storm Isaac is getting strength near hurricane and expected to move eastern Gulf of Mexico early Monday. As the day passed without serious damage or threat prices declined for both crude oil and natural gas.

But concern of declining demand is there from Residential and commercial sector. As per US energy department, natural gas demand has been decline by more than 5 percent in the last week.

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 up to the data analysis and information in our weekly reports.

Economic Data August 27, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Aug. 27

 

SEK

 

 

 

Swedish Retail Sales (MoM) 

0.30%

 

0.20% 

 

-0.30% 

   

 

 

EUR

 

 

 

German Ifo Business Climate Index 

102.3

 

102.6 

 

103.2 

   

 

 

EUR

 

 

 

German Current Assessment 

111.2

 

110.8 

 

111.5 

   

 

 

EUR

 

 

 

German Business Expectations 

94.2

 

95.0 

 

95.5 

   

 

WEEKLY

 

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

Event

Previous

Aug. 28

07:00

EUR

GfK German Consumer Climate 

5.9 

 

15:00

USD

CB Consumer Confidence 

65.9 

Aug. 29

01:00

EUR

German CPI (MoM) 

0.4% 

 

01:00

EUR

German CPI (YoY) 

1.7% 

Government Bond Auctions

Date Time Country 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

Metals and Energy Report Aug. 27, 2012

Gold recovered from early losses to close higher and returned to a four-month high, buoyed by hopes of fresh stimulus by global central banks and some renewed demand from ETF’s and rise in physical demand. Indian spot gold rose to a record high, tracking overnight gains in the global market while weaker rupee added further support, dampening demand for physical gold. India’s gold imports are set to fall further this year, as global bullion prices are driven higher by surplus cash in the market and by a weaker dollar, delegates at a major conference on the metal said on Friday.

A letter released on Friday from Chairman Bernanke to US Congressional Representative Issa, written just days ago, stated that the Feds, could and should do more to assist the economy and listed out their arsenal of weapons. Encouraging the markets that Mr. Bernanke would announce plans at his August 31st Jackson Hole address and action at the FOMC on September 13th.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, increased to 1,286.5 tons. Silver holdings of iShares silver trust, the largest ETF backed by the metal, increased to 9,820.81 tons, as on August 23.

A bid by some Republicans to return to the gold standard is unlikely because of a lack of international agreement on the matter and insufficient supply, according to the industry funded World Gold Council

German Chancellor Angela Merkel said after meeting with Greek Prime Minister Antonis Samaras in Berlin that Germany would not judge his country’s performance on its reform targets prematurely, but would await a report by the “troika” of international lenders due next month.

Chancellor Angela Merkel pledged to support the New Greek government as it struggles to reform its economy, saying the heavily indebted Greece must remain in the euro zone.

The metals pack weakened on poor eco data from China, after the HSBC PMI release showed that China was still falling and that a soft landing had not occurred. Although this offers more hope of stimulus the continued decline in global growth and manufacturing are weighing on the industrial metals

Copper futures eased slightly coming off one month highs, as hopes for more stimulus measures faded and on signs that Spain, the fourth-largest economy in the euro zone, could need sovereign aid soon.

Crude oil futures declined, following a trade journal report that the International Energy Agency may release strategic oil reserves as early as in September after dropping its resistance to a US-led plan. However, the threat to Gulf of Mexico oil production from Tropical Storm Isaac limited oil price major losses. Continued rumors of the release of the strategic reserves continued to grow over the weekend with no denials from the White House. A recent article suggests that the IEA which was originally against any release had changed its stance and now supports a release of the reserves if necessary to bring down prices.

Natural gas futures tumbled almost 4%, as high supplies and waning fears about Tropical Storm Isaac pushed prices to a nearly two-month low. The number of rigs actively exploring for oil and natural gas in the US declined by 16 this week to 1,898. 1,408 rigs were explored for oil, 486 were searching for gas while four were listed as miscellaneous, as per Houston-based oilfield services company Baker Hughes Inc. With all its up and downs for the week, Natural Gas ended trading on Friday when it had opened the previous Monday. 

Natural Gas Forecast August 27, 2012, Technical Analysis

The natural gas markets fell hard on Friday, in order to retest the $2.70 level for support. The area has held yet again, but looks increasingly vulnerable to selling pressure. If this level gives way, this should open up the door to at least $2.25 or lower. In fact, we would not be surprised to see the $2.00 level tested by the end of the year. However, we need to get below the $2.70 level on a daily close in order to start shorting this obviously down trending market again. As for buying, we aren’t considering it at this point in time, and would have to see a break above the $3.30 level to give consideration to long positions.

Natural Gas Forecast August 27, 2012, Technical Analysis
Natural Gas Forecast August 27, 2012, Technical Analysis

Natural Gas Forecast for the week of August 27, 2012, Technical Analysis

The natural gas markets attempted to rally this previous week again, but failed as they have over the last month or so. The markets are currently sitting on the $2.70 level, which sets up quite nicely as a technical signal. Once we get below the $2.70 level, we think that this contract will continue much lower at this point in time. In fact, you could make a case for the recent action to be a bearish flag. However, it must be noted that the measurement would have this contract essentially been worthless. We obviously don’t think that.

Nonetheless, we think that a break down below $2.70 necessitates a short position in this obviously bearish market. As for buying this contract, we won’t consider it until we are above the $3.30 level.

Natural Gas Forecast for the week of August 27, 2012, Technical Analysis
Natural Gas Forecast for the week of August 27, 2012, Technical Analysis

Natural Gas Weekly Fundamental Analysis August 27-31, 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 opened on Monday at 2.699 and closed on Friday at 2.698. It saw a hectic week of ups and downs but on the whole ended up where it began. The EIA injection report this week showed an increase in inventory. Weather patterns seem to be holding at a comfortable temperature although there is a major storm brewing in the gulf which may affect prices.

Natural Gas prices may become more volatile in the coming weeks, as we move closer to the heart of the Atlantic hurricane season in September. A “weather” premium may be imbedded in prices, as many bearish traders are having a difficult time moving the October futures below 2.720, though a move above major resistance at 3.000 may be difficult unless we see a long-term shutdown of Gas production in the Gulf of Mexico due to storm damage

Date

Last

Open

High

Low

Change %

Aug 24, 2012

2.698

2.833

2.876

2.696

-4.80%

Aug 23, 2012

2.834

2.856

2.858

2.686

-0.79%

Aug 22, 2012

2.857

2.818

2.862

2.773

1.38%

Aug 21, 2012

2.817

2.772

2.836

2.704

1.60%

Aug 20, 2012

2.773

2.699

2.784

2.687

2.72%

 

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 up to the data analysis and information in our weekly reports.

Major Economic Events for the week of August 20-24, 2012 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

Event

Actual

Forecast

Previous

Aug. 20

GBP

Rightmove House Price Index (MoM) 

-2.4%

 

-1.7%

Aug. 21 

GBP

CBI Industrial Trends Orders 

-21

-8

-6

Aug. 22 

USD

Existing Home Sales 

4.47M

4.52M

4.37M

Aug. 23

CNY

Chinese HSBC Manufacturing PMI 

47.80

 

49.30

 

EUR

German GDP (QoQ) 

0.3%

0.3%

0.3%

 

EUR

German GDP (YoY) 

0.5%

0.5%

0.5%

 

EUR

French Manufacturing PMI 

46.2

43.6

43.4

 

EUR

German Manufacturing PMI 

45.1

43.4

43.0

 

EUR

Manufacturing PMI 

45.3

44.2

44.0

 

GBP

BBA Mortgage Approvals 

28.4K

28.2K

25.9K

 

GBP

CBI Distributive Trades Survey 

-3

15

11

 

USD

Initial Jobless Claims 

372K

365K

368K

 

USD

Continuing Jobless Claims 

3317K

3300K

3313K

 

USD

New Home Sales 

372K

365K

359K

Aug. 24

GBP

Business Investment (QoQ) 

-1.5%

2.8%

1.9%

 

GBP

GDP (QoQ) 

-0.5%

-0.5%

-0.7%

 

GBP

GDP (YoY) 

-0.5%

-0.6%

-0.8%

 

USD

Core Durable Goods Orders (MoM) 

-0.4

0.5%

-1.4%

 

USD

Durable Goods Orders (MoM) 

4.2

2.4%

1.3%

Historical:

Highest: 6.106 on Jan 07, 2010

Average: 3.989 over this period

Lowest: 1.903 on April 19, 2012

 

WEEKLY

 

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

Date

Time

Currency

Event

Previous

 Aug. 27

09:00

EUR

German Ifo Business Climate Index 

103.3 

 

09:00

EUR

German Current Assessment 

111.6 

 

09:00

EUR

German Business Expectations 

95.6 

Aug. 28

07:00

EUR

GfK German Consumer Climate 

5.9 

 

15:00

USD

CB Consumer Confidence 

65.9 

Aug. 29

01:00

EUR

German CPI (MoM) 

0.4% 

 

01:00

EUR

German CPI (YoY) 

1.7% 

Government Bond Auctions

Date  Time  Country 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

Natural Gas Fundamental Analysis August 27, 2012, Forecast

Analysis and Recommendations:

Natural Gas added 0.022 to trade at 2.825 on positive market sentiment and a correction from market over reaction t yesterdays EIA report. Natural gas futures fell sharply yesterday, pressured by a bearish government report on inventories, but concerns about a storm in the Caribbean prompted some shorts to cover and helped lift prices from day’s low. The US EIA report showed gas inventories rose last week by larger-than expected 47bn cubic feet to 3.308 trillion cubic feet, triggering a selloff that briefly drove front month futures to a 2-month low.

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 up to the data analysis and information in our weekly reports.

Economic Data August 24, 2012 actual v. forecast 

Date

Time

 

Currency

 

Importance

 

Event

Actual

 

Forecast

 

Previous

 

 

Aug. 24

00:30

 

AUD

 

 

 

RBA Governor Stevens Speaks 

 

 

 

 

 

 

 

 

09:30

 

GBP

 

 

 

Business Investment (QoQ) 

-1.5%

 

2.8% 

 

1.9% 

 

 

 

09:30

 

GBP

 

 

 

GDP (QoQ) 

-0.5%

 

-0.5% 

 

-0.7% 

 

 

 

09:30

 

GBP

 

 

 

GDP (YoY) 

-0.5%

 

-0.6% 

 

-0.8% 

 

 

 

13:30

 

USD

 

 

 

Core Durable Goods Orders (MoM) 

-0.4%

 

0.5% 

 

-2.2% 

   

 

13:30

 

USD

 

 

 

Durable Goods Orders (MoM) 

4.2%

 

2.4% 

 

1.6% 

   

 

WEEKLY

 

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

Event

Previous

 Aug. 27

09:00

EUR

German Ifo Business Climate Index 

103.3 

 

09:00

EUR

German Current Assessment 

111.6 

 

09:00

EUR

German Business Expectations 

95.6 

Aug. 28

07:00

EUR

GfK German Consumer Climate 

5.9 

 

15:00

USD

CB Consumer Confidence 

65.9 

Aug. 29

01:00

EUR

German CPI (MoM) 

0.4% 

 

01:00

EUR

German CPI (YoY) 

1.7% 

Government Bond Auctions

Date  Time  Country 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

Natural Gas Forecast August 24, 2012, Technical Analysis

The natural gas markets fell during much of the session on Thursday, but bounced again off of the $2.70 level in order to confirm the massive support that we are starting to see build up at that point. Looking at this chart though, buying natural gas simply doesn’t seem like a wise thing to do, and now that we have formed a hammer for the Thursday session it looks more and more likely that a break below the $2.70 level will be truly significant.

On that breakdown, we are more than willing to start selling this again. However, there is also the possibility that we get a bit of a bounce and weakness afterwards. With that in mind, we are more than willing to sell rallies that show signs of weakness. As for buying natural gas, we are fairly adamant that it won’t happen until we clear the $3.30 level.

 

Natural Gas Forecast August 24, 2012, Technical Analysis
Natural Gas Forecast August 24, 2012, Technical Analysis

Natural Gas Fundamental Analysis August 24, 2012, Forecast

Analysis and Recommendations:

Natural Gas  prices are trading above $2.784/MMBTU in international market with drop of close to 1 percent from yesterday’s closing. As per US Energy department, natural gas storage is expected to increase by 40 BCF, almost double from last week’s storage data. US consumption has been fallen by more than 2.74 percent and demand declined by 2.43 percent in the last week. However, demand was at 11 percent high during the same period in the last year. On the other side, declining consumption due to mild weather condition may weigh on gas prices in today’s session. As per US weather channel, temperature is likely to remain normal which may not pull gas demand high.  

Higher storage expectation and concern of lower demand may continue to keep prices under pressure. As per National Hurricane Center, tropical storm Isaac is moving over Eastern Caribbean Sea heading towards Gulf region. Concern of supply disturbance may create positive move in gas prices. However, there may be some volatility in the market ahead of tomorrow’s meet of Iran with West bodies in Vienna regarding nuclear Program.

Update: The Natural Gas storage report was just released by the EIA, the report stated:

Working gas in storage was 3,308 Bcf as of Friday, August 17, 2012, according to EIA estimates. This represents a net increase of 47 Bcf from the previous week. Stocks were 423 Bcf higher than last year at this time and 357 Bcf above the 5-year average of 2,951 Bcf. In the East Region, stocks were 115 Bcf above the 5-year average following net injections of 48 Bcf. Stocks in the Producing Region were 178 Bcf above the 5-year average of 930 Bcf after a net injection of 4 Bcf. Stocks in the West Region were 63 Bcf above the 5-year average after a net drawdown of 5 Bcf. At 3,308 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 up to the data analysis and information in our weekly reports.

Economic Data August 23, 2012 actual v. forecast

Aug. 23

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

47.80

 

 

 

49.30 

 

 

EUR

 

 

 

German GDP (QoQ) 

0.3%

 

0.3%

 

0.3% 

 

 

EUR

 

 

 

German GDP (YoY) 

0.5%

 

0.5%

 

0.5% 

 

 

EUR

 

 

 

French Manufacturing PMI 

46.2

 

43.6

 

43.4 

 

 

EUR

 

 

 

German Manufacturing PMI 

45.1

 

43.4

 

43.0 

 

 

SEK

 

 

 

Swedish Unemployment Rate 

7.00%

 

7.20%

 

8.80% 

 

 

EUR

 

 

 

Manufacturing PMI 

45.3

 

44.2

 

44.0 

 

 

NOK

 

 

 

Norwegian GDP (QoQ) 

1.2%

 

1.0%

 

1.5% 

 

 

GBP

 

 

 

BBA Mortgage Approvals 

28.4K

 

28.2K

 

25.9K 

 

 

GBP

 

 

 

CBI Distributive Trades Survey 

-3

 

15

 

11 

 

 

USD

 

 

 

Initial Jobless Claims 

372K

 

365K

 

368K 

 

 

USD

 

 

 

Continuing Jobless Claims 

3317K

 

3300K

 

3313K 

 

 

USD

 

 

 

New Home Sales 

 

 

365K

 

350K 

 

WEEKLY

Upcoming Economic Events that affect the CHF, EUR, GBP and North American markets

Aug. 24

08:00

 

HUF

 

 

Hungarian Retail Sales (YoY) 

 

 

-2.40% 

 

-2.50% 

 

09:30

 

GBP

 

 

Business Investment (QoQ) 

 

 

2.8% 

 

1.9% 

 

09:30

 

GBP

 

 

GDP (QoQ) 

 

 

-0.5% 

 

-0.7% 

 

09:30

 

GBP

 

 

GDP (YoY) 

 

 

-0.6% 

 

-0.8% 

 

13:30

 

USD

 

 

Core Durable Goods Orders (MoM) 

 

 

0.5% 

 

-1.4% 

 

13:30

 

USD

 

 

Durable Goods Orders (MoM) 

 

 

2.4% 

 

1.3% 

Government Bond Auctions

Date  Time  Country 

23/8  05:45  Japan 

23/8  11:30  UK 

23/8  19:00  US 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

 

Commodities Soar After FOMC Minutes

Global markets reacted to the strong words in the minutes from the FOMC supporting additional stimulus. The question seemed to be more when then what. Traders interpreted the minutes to mean that the stimulus would be at the upcoming meeting of the FOMC in Jackson Hole any later would be too late to help the economy before the holidays and the end of the year.

Commodities were the biggest winners yesterday, with gold surged above $1,660 per ounce for the first time since early May, breaking above its recent trading range as minutes from the US Federal Reserve convinced many bullion investors that another round of monetary stimulus is imminent. Gold holdings  of SPDR gold trust, the largest ETF backed by the precious metal, increased to 1,281.98 tons, as on August 22. Silver holdings of iShares silver trust, the largest ETF backed by the metal, declined to 9,784.63 tons, as on August 22.

The minutes from the July 31-August 1 meeting, which came just before a string of upbeat economic data, showed that central bankers were categorical in their dissatisfaction with the current economic outlook. Extra stimulus, most likely in the form of a third round of bond buying otherwise known as quantitative easing, amounts to the printing of more US dollars, thereby diluting its value.

Copper prices extended gains to fresh 1-month highs in after hour’s trade on Wednesday, after minutes of the most recent Federal Reserve policy meeting indicated the central bank was likely to further ease monetary policy “fairly soon” unless the economy improves. Refined Copper market was in production deficit of 21,000 tons in May 2012, as per release from International Copper Study Group (ICSG). However, after making seasonal adjustments the surplus was much higher at 42,000 tons. For the first 5-months of the year, refined Copper market was in deficit of 405,000 tons, compared to 98,000 tons during similar period last year, as per ICSG.

Oil prices rose (98.01) on indications that the Federal Reserve is likely to provide more stimuli while a sharp drop in US crude inventories countered concerns about Europe’s debt crisis. Crude oil inventories fell by 5.41mn barrels to 360.7mn barrels, Gasoline supplies shrank by 1mn barrels to 202.7mn barrels & Supplies of distillate fuel, which include diesel and heating oil, increased by 1mn barrels to 125.2mn barrels.

The center of Tropical Storm Isaac was approaching the Caribbean and expected to become a hurricane, lending support to oil futures because it could threaten U.S. energy production in the Gulf of Mexico.

Natural gas futures closed higher (2.846), as traders looked with anticipation at the potential for a tropical storm to disrupt energy production in the US Gulf of Mexico for the first time this season. Natural gas inventories are expected to increase by 33-35bn cubic feet, actual data will be released by EIA later in the day.

Natural Gas Forecast August 23, 2012, Technical Analysis

The natural gas markets initially fell during the Wednesday session, but bounce in order to form a bit of a hammer. The $2.70 level below is the support that we are trying to break through at this moment in time, but this hammer formed on Wednesday has somewhat concerned as to the ability of this market to break below there in the short term. Is because of this that we close our short positions today.

Obviously, if we get a daily close below the $2.70 level we are more than willing to start selling. We are also more than willing to start selling again if we get some type of failed rally. We will not buy this market until we get well above the highs that we said just a few weeks ago. In the meantime, we will be very flat of this market and on the sidelines.

Natural Gas Forecast August 23, 2012, Technical Analysis
Natural Gas Forecast August 23, 2012, Technical Analysis
 

Natural Gas Fundamental Analysis August 23, 2012, Forecast

Analysis and Recommendations:

Natural Gas continued to climb trading at 2.841 as weather continued to remain unseasonably warm and the National Weather forecast is predicting a longer summer season than expected. Also several storms are brewing in the Atlantic and the Gulf.

Overall commodities climbed universally as traders turn to more risk and were in positive moods.

With little in the way of eco data and news flow, traders were left to their own sentiment.

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 up to the data analysis and information in our weekly reports.

Economic Data August 23, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Aug. 22

 

JPY

 

 

 

Trade Balance 

-0.33T

 

-0.46T 

 

-0.32T 

   

 

 

CAD

 

 

 

Core Retail Sales (MoM) 

-0.4%

 

0.3% 

 

0.4% 

   

 

 

CAD

 

 

 

Retail Sales (MoM) 

-0.4%

 

0.1% 

 

0.2% 

   

 

 

USD

 

 

 

Existing Home Sales 

4.47M

 

4.52M 

 

4.37M 

 

 

 

WEEKLY

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

Event 

Forecast

Previous

Aug 24

1:30pm

USD

Durable Goods Orders m/m

2.8%

-1.4%

 

2:00pm

EUR

Belgium NBB Business Climate

-10.8

1.3%

Government Bond Auctions

Date  Time  Country 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

 

Crude Oil ahead of the FOMC minutes

As markets began trading on Wednesday, WTI crude oil is trading almost flat at $96.7/bbl Crude oil prices climbed to a 3-month high, on speculation that euro-area leaders will make progress in resolving the region’s debt crisis at their meeting this week. China’s crude oil imports from Iran fell nearly a third in July from an 11-month high in June, ensuring that the world’s second-largest oil consumer continues to meet the terms of a waiver from the United States on financial sanctions.

Contraction in Japan’s export in the month of July reported today early morning is weighing on Asian equities market and so on oil prices have come under pressure. The American Petroleum Institute, reported that crude oil stocks has declined by more than 6 million barrels in the last week as import have fallen by more than 12 percent on weekly basis. Lower stock reports might be limiting the fall as crude oil price movement will most likely remain in a small range a day ahead of the crucial actual inventory report from US Energy department and minutes of FOMC minutes.

The US Energy Administration stated that crude oil stocks are likely to decline along gasoline inventory due to lower refinery utilization. So, expectation of declining stocks may add positive point in oil prices.

Traders will be closely eyeing and interpreting the FOMC minutes which will provide a full picture of US economic growth. Other than this, Greece Ministers will meet with Luxemburg politicians today and may create some volatility in the market by keeping the euro under pressure, which may limit the gain in oil prices.

From economic data front, US housing sales are likely to increase with improvement in mortgage application. A positive trend in US session is also expected. Last week US housing and building permits were viewed as a positive and home builder confidence soared. Today’s release might have a final affect on stimulus from the Feds in their meeting next week.

Liquefied natural gas in the US is trading above $2.814/MMBTU with gain of more than 1% from yesterday’s closing. The US Energy department said natural gas storage is expected to increase by 39 BCF, almost double from last week’s storage data. US consumption has been fallen by more than 2.74 percent and demand declined by 2.43 percent in the last week. However, demand was at 11 percent high during the same period in the last year.

On the other side, declining consumption due to mild weather condition may weigh on gas prices in today’s session.

AccuWeather forecasts has shown that temperature is likely to remain normal which may not pull gas demand high. Higher storage expectation and concern of lower demand may continue to keep prices under pressure ahead of US crude inventory report later today and tomorrow’s natural gas inventory.

Natural Gas Forecast August 22, 2012, Technical Analysis

Natural gas markets attempted to fall below the $2.70 level again on Tuesday, only to bounce and form a bit of a hammer. This suggests to us that perhaps we are getting ready to bounce again, and as such we are not ready to sell quite yet.

We still see the $3.00 level as an area where the sellers will step in, and as such we are more than willing to sell bearish action up close towards that price. Until we get that or a break down below the 2.70 level on the downside, we are not adding to our already short positions.

Natural Gas Forecast August 22, 2012, Technical Analysis
Natural Gas Forecast August 22, 2012, Technical Analysis

Natural Gas Fundamental Analysis August 22, 2012, Forecast

Analysis and Recommendations:

Natural Gas gained 0.029 to trade at 2.805 following cues from the overall commodities pack, as all energy and metals traded positive today.

Temperatures in the US are higher than expected which might help reduce inventory this week. There are no storms or pressures to cause any fundamental increase, except a recent article stated that natural gas as of April surpassed coal as the prime fuel for electricity and that NG was more efficient and natural gas plants had lower capital expense. The article points out that all new power plants will use natural gas now that it is abundant supply.

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 up to the data analysis and information in our weekly reports.

Economic Data August 22, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Aug. 21

 

AUD

 

 

 

Monetary Policy Meeting Minutes 

 

 

 

 

 

 

 

 

 

NZD

 

 

 

Inflation Expectations (QoQ) 

2.3%

 

 

 

2.4% 

 

 

 

 

HKD

 

 

 

Hong Kong CPI (YoY) 

1.60%

 

3.40% 

 

3.70% 

 

 

 

 

GBP

 

 

 

CBI Industrial Trends Orders 

-21

 

-8 

 

-6 

 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

-0.1%

 

0.4% 

 

0.9% 

   

 

WEEKLY

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Aug 22

7:00am

CHF

Trade Balance

2.10B

 
 

8:00am

EUR

French Flash Manufacturing PMI

43.8

2.25B

 

8:00am

EUR

French Flash Services PMI

50.1

43.4

Aug 23

8:30am

EUR

German Flash Manufacturing PMI

43.6

50.0

 

8:30am

EUR

German Flash Services PMI

50.2

43.0

 

9:00am

EUR

Flash Manufacturing PMI

44.3

50.3

 

9:00am

EUR

Flash Services PMI

47.9

44.0

 

9:30am

GBP

BBA Mortgage Approvals

28.2K

47.9

 

11:00am

GBP

CBI Realized Sales

16

26.3K

 

1:30pm

USD

Unemployment Claims

365K

11

 

2:00pm

USD

Flash Manufacturing PMI

51.3

366K

 

3:00pm

USD

New Home Sales

362K

51.4

 

9:30am

GBP

Revised GDP q/q

-0.5%

350K

 

9:30am

GBP

Prelim Business Investment q/q

2.8%

-0.7%

 

1:30pm

USD

Core Durable Goods Orders m/m

0.5%

1.9%

Aug 24

1:30pm

USD

Durable Goods Orders m/m

2.8%

-1.4%

 

2:00pm

EUR

Belgium NBB Business Climate

-10.8

1.3%

           

Government Bond Auctions

Date  Time  Country 

21/8  10:30  Spain

21/8  12:00  EFSF 

22/8  11:30  Germany 

22/8  11:10  Sweden 

23/8  05:45  Japan 

23/8  11:30  UK 

23/8  19:00  US 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

Crude Oil Eases in Asian Trading

As of this writing, crude oil prices are trading almost flat at $96/bbl in international market although price is showing a bit of weakness in Asian trading on Tuesday morning.  

Concern of China easing after property price rose high in July is weighing in Asian equities market. Thus, lower equity market might be weighing on oil futures prices.

Ahead of tomorrow’s meet of Greece Prime minister with Luxemburg Prime Minister to discuss Greece request on extension of Fiscal adjustment program, Euro is gaining some points. Thus, optimism from this week’s meet in order to extend its time period for austerity may limit the fall in oil prices. There are no major economic releases due for today.

As per US Energy department, crude oil stocks are likely to increase along other petroleum stocks for the first time in last four weeks of time. Increase in import and concern of lower demand may create higher stocks. So, higher stocks level may drive oil prices low. As per National Hurricane Center, there is 30 percent chance of tropical cyclone formation, which may not create much impact on oil production and supply. ( a side note, hurricane season runs from late July to early November )

 From PV-O analysis, a fall in crude oil prices and higher volume and open interest indicates that investors are ready to take the bearish market in this commodity.

Markets are no longer paying much attention to the headline grabbing rhetoric from Israel and the violence in Syria seems to have subsided

Natural gas prices are trading below $2.770MMBTU in international market with loss of more than 0.20 percent from yesterday’s closing. As per US Energy department, natural gas storage has increased by 20 BCF, lower than prior week due to fall in supply in the last week. However, US consumption has been fallen by more than 2.74 percent and demand declined by 2.43 percent in the last week.

However, demand was at 11 percent high during the same period in the last year. On the other side, declining consumption due to mild weather condition may weigh on gas prices in today’s session. As per US weather channel, temperature is likely to remain normal which may not pull gas demand high.