Global Exchanges, Metals and Energy in the Morning

All the Asian indices are trading the green. Shanghai and Hang Seng are up by 0.3% and 1% respectively. Nikkei and Kospi are trading in the green up by 0.6% and 0.9% respectively while Strait Times and Taiwan are up by 0.9% and 1.9% respectively.

Worries about a global growth slowdown and uncertainty surrounding Europe’s debt crisis kept investors on edge and trading choppy on Monday. Still, U.S. markets ultimately closed the day not far from where they opened. The S&P 500 closed flat. NASDAQ gained 12 points, or 0.5%. Dow Jones dropped 17 points, or 0.1%. Factory orders declined 0.6% in April, the government reported on Monday. The report was weaker than the 0.1% increase expected.  

Anxieties over the health of the Spanish banking system and the possibility that Greece could soon exit the euro remain high. Fear and Greed index remained deeply entrenched in extreme fear territory.

The European markets closed mixed on Monday, on a relatively light trading day. The U.K. market was closed due to the Queen’s Diamond Jubilee and will be closed again on Tuesday. DAX in Germany fell 1.2%, while France’s CAC 40 rose 0.1%. British markets were closed for a bank holiday.

Gold eased slightly on profit-booking, after central banks refrained from adding additional stimulus measures to boost their economies amid Europe’s intensifying fiscal crisis and signs of a slowdown in the US.

Gold holdings  of SPDR gold trust, the largest ETF backed by the precious metal, increased to 1,273.88 tons, as on June 1.

Silver holdings of iShares silver trust, the largest ETF backed by the metal, increased to 9,638.9 tons, as on June 4. The dollar index, which measures the US unit against a basket of six major, fell to 82.878 from 83.035 on late Thursday.

In Europe, France and the European Commission signaled their support for an ambitious plan to use the euro zone’s permanent bailout fund to rescue debt stricken banks, in n effort to reassure investors that they can contain an escalating crisis.

Copper prices declined to an 8-month low on COMEX, but later rebounded on support from a rally in euro against the dollar and steadier tone in equities.  Copper fell for the fourth straight session, unable to sustain an early bounce from a 7-month low, as mounting fears over the global economy continued to weigh on the demand outlook for industrial metals.

Copper futures for July delivery closed slightly down at $3.307 per pound on the COMEX of the New York Mercantile Exchange. Some US copper fabricators have resorted to buying primary metal rather than scrap due to tightness in supply, which remains supportive to cathode premiums, traders said.

The premium for primary aluminum shipments to Japan in the July-September quarter has been set in a range of $200-$210 per ton for several deals, a trader said.

Crude oil futures close to 1%, as the euro strengthened against the dollar after European leaders agreed to discuss closer banking cooperation.

Natural gas rose from a four-week low, on speculation that warm-weather forecasts for the eastern US will increase fuel demand from power plants.

Natural Gas Forecast June 5, 2012, Technical Analysis

The natural gas markets managed to finish the day on a positive tone, and as a result the market has set up a fade coming to our attention. The $2.60 and $2.80 levels should be resistive, and as such we are looking for a weak candle on the shorter time frames such as the hourly or four hour charts. The selling of this market is the only thing we can do at this point, as the trend is so bearish overall. As for buying, we won’t even consider it until we get above the $3 level. 

Natural Gas Forecast June 5, 2012, Technical Analysis
Natural Gas Forecast June 5, 2012, Technical Analysis

Natural Gas Fundamental Analysis June 5, 2012, Forecast

Analysis and Recommendations:

Natural Gas is trading at 2.393. Currently, gas futures prices are trading below $2.390/mmbtu with gain of more than 0.60 percent. As per US Energy department, Demand from Residential sector is expected to decline in comparison to last year, as this year summer season is going to be less severe on account of lower number of Cooling Degree Days expectation, reported by EIA. Currently, the storage level is at 2815BCF, positioned storage volumes 732 Bcf above year-ago levels. In the coming week, also the injection level is likely to increase on the back of rising supply and lower demand, which may weigh on gas prices. Most importantly, As per National Hurricane Centre, as of now there is no tropical storm formation is seen in North Atlantic region.

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 June 4, 2012 actual v. forecast (virtually no eco data in Europe or the US today)

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Jun. 04

 

JPY

 

 

 

Monetary Base (YoY) 

2.4%

 

0.2% 

 

-0.3% 

 

 

 

 

AUD

 

 

 

MI Inflation Gauge (MoM) 

0.0%

 

 

 

0.3% 

 

 

 

 

AUD

 

 

 

Company Gross Profits (QoQ) 

-4.0%

 

-2.0% 

 

-6.5% 

 

 

 

 

AUD

 

 

 

ANZ Job Advertisements (MoM) 

-2.40%

 

 

 

-0.80% 

   

 

WEEKLY

 

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

Date

Time

Currency

 

Forecast

Previous

 

Jun 5

9:00

EUR

Retail Sales m/m

 

0.3%

10:00

EUR

German Factory Orders m/m

 

2.2%

14:00

USD

ISM Non-Manufacturing PMI

 

53.5

 

Jun 6

6th-8th

GBP

Halifax HPI m/m

   

8:30

GBP

Construction PMI

 

55.8

10:00

EUR

German Industrial Production m/m

 

2.8%

11:45

EUR

Minimum Bid Rate

1.00%

1.00%

12:30

EUR

ECB Press Conference

   

12:30

USD

Revised Nonfarm Productivity q/q

 

-0.5%

14:30

USD

Crude Oil Inventories

   

18:00

USD

Beige Book

   

23:01

GBP

BRC Retail Sales Monitor y/y

 

-3.3%

 

Jun 7

7:00

CHF

Foreign Currency Reserves

 

235.6B

7:15

CHF

CPI m/m

 

0.1%

8:30

GBP

Services PMI

 

53.3

TBD

EUR

French 10-y Bond Auction

   

11:00

GBP

Asset Purchase Facility

 

325B

11:00

GBP

Official Bank Rate

0.50%

0.50%

TBD

GBP

MPC Rate Statement

   

12:30

USD

Unemployment Claims

 

383K

14:00

USD

Fed Chairman Bernanke Testifies

   

 

Jun 8

8:30

GBP

PPI Input m/m

 

-1.5%

8:30

GBP

Consumer Inflation Expectations

 

3.5%

TBD

GBP

10-y Bond Auction

   

12:30

USD

Trade Balance

 

-51.8B

14:00

USD

Fed Chairman Bernanke Testifies

   

 

Crude Oil in a Crisis Marketplace

The Asian equities are also down by more than a percent owing to weak services PMI numbers from China and lower demand for vehicles and durables around the globe. Today, from Euro-zone the German chancellor may meet the European commission ahead of the EU Summit to discuss regarding the issuance of common Euro-bonds and recapitalization of Banks. From the economic data front, the Euro-zone confidence may deteriorate further while producer price index may decrease slightly after lower CPI and may continue to weaken the shared currency and commodities. The US factory orders might also remain fragile after weak ISM and non-farm and may continue to weaken commodities for the day. Overall, weak equities and concerned Europe may continue to drag down base metals in today’s session.  

During early Asian session crude oil futures prices are hovering below $82.50/bbl with fall of more than 1.3 percent in electronic platform. Concern of lower demand due to prevailing global economic concern from major oil consuming nation are basically pressurized oil prices to fall continuously. Most of the Asia equities are trading down as a reaction to the lower payrolls data and contraction in ISM index released from US. In addition to this, lower PMI manufacturing index reported from China is also creating speculation of lower oil demand. China bound crude shipments seen falling 13 percent last week. Citi group cut down the crude price forecast for the U.S. benchmark West Texas Intermediate (WTI) by USD 11 to USD 95 per barrel for 2012 and by USD 28 to USD 85 per barrel for 2013.

Today, market will be eyeing on EU commission meet with German on Spain bank capitalization on table, which may keep Euro under pressure. We may expect oil futures prices to trade under pressure by taking negative cues from the above discussed factors, however little pull back is expected during US session on expectation of improving factory orders.

Currently, gas futures prices are trading below $2.340/mmbtu with gain of more than 0.60 percent futures platform. As per US Energy department, Demand from Residential sector is expected to decline in comparison to last year, as this year summer season is going to be less severe on account of lower number of Cooling Degree Days expectation, reported by EIA. Currently, the storage level is at 2815BCF, positioned storage volumes 732 Bcf above year-ago levels. In the coming week, also the injection level is likely to increase on the back of rising supply and lower demand, which may weigh on gas prices. Most importantly, As per National Hurricane Centre, as of now there is no tropical storm formation is seen in North Atlantic region. 

Natural Gas Forecast June 4, 2012, Technical Analysis

The natural gas markets fell again during the Friday session that saw a poor jobs number out of America had the “risk off” trade back in fashion for most traders. The ability for any market to hold onto gains was tested, and this one just fell flat – not even bothering to try and rally in the face of “possible” quantitative easing. The trend has been down for a long time, and we are short of this market. In fact, on a break of the Friday session lows, we are adding to our short position. Buying isn’t even a possibility at this point. 

Natural Gas Forecast June 4, 2012, Technical Analysis
Natural Gas Forecast June 4, 2012, Technical Analysis

Natural Gas Forecast for the Week of June 4, 2012, Technical Analysis

The natural gas markets fell for the week as the sellers came back into the markets the previous 5 sessions. The $3 level hasn’t even been significantly challenged, and with the lackluster American jobs numbers, it looks as if the energy demand will be weak in the US, one of the world’s largest consumers of it. The breaking of the bottom of the week candle will have us selling. Also, we sell any rallies, and have absolutely no intention of buying at this point in time. The supply is far exceeding the demand at this point, and our view hasn’t changed over the last several months. 

Natural Gas Forecast for the Week of June 4, 2012, Technical Analysis
Natural Gas Forecast for the Week of June 4, 2012, Technical Analysis

Natural Gas Weekly Fundamental Analysis June 4 – 8, 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 fell this week to trade at 2.324. NG has steadily dropped since reaching at recent high of 2.82 just two weeks ago.

Date

Last

Open

High

Low

Change %

Jun 01, 2012

2.324

2.382

2.393

2.314

-2.50%

May 31, 2012

2.383

2.446

2.498

2.376

-2.58%

May 30, 2012

2.446

2.486

2.508

2.396

-1.59%

May 29, 2012

2.486

2.550

2.610

2.466

-2.49%

May 28, 2012

2.549

2.559

2.567

2.530

-0.43%

 

The combination of one of the warmest winters (November-March) in decades and low spot natural gas prices contributed to low wholesale electric prices at major market locations during the winter of 2011-2012 Warm weather kept electric system load low across the East Coast and helped dampen the need for coal-fired generation. Natural gas generation was up significantly to take advantage of low natural gas prices. Reduced nuclear generation due to outages and reduced hydropower generation both served to moderate declining electricity prices in much of the country.

Working natural gas in storage rose last week to 2,815 billion cubic feet (Bcf) as of Friday, May 25, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report 

Active natural gas rotary rigs currently total 594, according to the latest weekly data released by Baker Hughes Incorporated. According to Baker Hughes data, natural gas-directed horizontal rigs have driven the decline in total natural gas rigs over the past several months. Horizontal-directed natural gas rig counts have fallen to 411, from levels in the low-600s 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 up to the data analysis and information in our weekly reports.

Historical:

Highest: 6.106 on Jan 07, 2010

Average: 3.989 over this period

Lowest: 1.903 on April 19, 2012

 

Economic Events: (GMT)

WEEKLY

 

Natural Gas Fundamental Analysis June 4, 2012, Forecast

Analysis and Recommendations:

Natural Gas is trading at 2.337 on par our forecasts in April and our monthly report for May. Speculators were able to push down the price of NG to a 10 year low, and then talked up the markets to push the price to a high of 2.82 until they abandoned the commodity and it fell back to its proper level.

Supplies have remained overall steady, inventory has not changed much and demand has not increased. Simple reports from the EIA saying the energy producers were going to turn to NG for their extra capacity because of its low price, started the markets moving up, compounded with gas producers closing wells and cutting back production because of high inventories and low demand, keeping prices too low. All of this was magnified and amplified to artificially create a market.

Weather forecasts call for a warmer than average spring, but not a hot spring, or an exceptionally hot summer, so there will not or should not be high seasonal demand. NG is not exported at the present time so oversea demands or currency fluctuations do not directly affect the price.

Therefore price should be fairly stable.

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.

WEEKLY

Natural Gas Forecast June 1, 2012, Technical Analysis

The natural gas markets fell again for the Thursday session to hover around the $2.40 level. The action lately has been bearish, but the market certainly needed to rest, and it looks as if the market could bounce at this point. None the less, the trend is still down, and a break of the $2.40 level on the daily close would be a sell signal as this commodity is far too abundant to think it will continue to rise for any real length of time.

Rallies will also be sold too, as soon as there is a sign of weakness on the shorter time frames. The $2.80 – $3 area is our “line in the sand” and it takes a move above that level would have us rethinking our bearish stance. However, at this point selling seems to be the right move.

 

Natural Gas Forecast June 1, 2012, Technical Analysis
Natural Gas Forecast June 1, 2012, Technical Analysis

Natural Gas Fundamental Analysis June 1, 2012, Forecast

Analysis and Recommendations:

Natural Gas declined to trade at 2.416 down 0.003. Inventory reports showed that supplies continued to rise, now that the weather situation has calmed. Without seasonal demand, natural gas, should settle back to the 2.36 range, where it was trading before falling to a 10 year low and then climbing higher then 2.80.

Natural-gas inventories rose by 71 billion cubic feet for the week ended May 25, the U.S. Energy Department said Thursday. Analysts polled by Platts forecast a climb of between 67 billion and 71 billion cubic feet. Total stocks now stand at 2.815 trillion cubic feet, up 732 billion cubic feet from the year-ago level and 724 billion cubic feet above the five-year average, the government 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 up to the data analysis and information in our weekly reports.

Economic Data for May 31, 2012 actual v. forecast

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

 

JPY

 

 

 

Industrial Production (MoM) 

0.2%

 

0.5% 

 

1.3% 

 

 

 

AUD

 

 

 

Building Approvals (MoM) 

-8.7%

 

0.7% 

 

6.0% 

   

 

AUD

 

 

 

Private New Capital Expenditure (QoQ) 

6.1%

 

4.0% 

 

-0.7% 

   

 

CHF

 

 

 

GDP (QoQ) 

0.7%

 

0.1% 

 

0.5% 

   

 

GBP

 

 

 

Nationwide HPI (MoM) 

0.3%

 

0.2% 

 

-0.3% 

   

 

EUR

 

 

 

French Consumer Spending (MoM) 

0.6%

 

0.3% 

 

-2.6% 

   

 

EUR

 

 

 

German Unemployment Rate 

6.7%

 

6.8% 

 

6.8% 

 

 

 

EUR

 

 

 

German Unemployment Change 

0K

 

-5K 

 

18K 

   

 

EUR

 

 

 

CPI (YoY) 

2.4%

 

2.5% 

 

2.6% 

 

 

 

USD

 

 

 

ADP Nonfarm Employment Change 

133K

 

148K 

 

113K 

   

 

CAD

 

 

 

Current Account 

-10.3B

 

-11.0B 

 

-9.7B 

   

 

USD

 

 

 

Initial Jobless Claims 

383K

 

370K 

 

373K 

   

 

USD

 

 

 

GDP (QoQ) 

1.9%

 

1.9% 

 

2.2% 

 

 

 

USD

 

 

 

Continuing Jobless Claims 

3242K

 

3250K 

 

3278K 

   

 

USD

 

 

 

Chicago PMI 

52.7

 

56.5 

 

56.2 

   

 

WEEKLY

Weekly Natural Gas Storage Report
Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)

 

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

Date

Time

Currency

 

Previous

Jun 1

TBD

GBP

Halifax HPI m/m

 

7:15

CHF

Retail Sales y/y

4.2%

7:30

CHF

SVME PMI

46.9

7:45

EUR

Italian Manufacturing PMI

43.8

8:30

GBP

Manufacturing PMI

50.5

9:00

EUR

Unemployment Rate

10.9%

12:30

USD

Non-Farm Employment Change

115K

12:30

USD

Unemployment Rate

8.1%

12:30

USD

Core PCE Price Index m/m

0.0%

12:30

USD

Personal Spending m/m

0.2%

12:30

USD

ISM Manufacturing PMI

0.3%

14:00

USD

S&P/CS Composite-20 HPI y/y

54.8

 

Natural Gas Forecast May 31, 2012, Technical Analysis

The natural gas markets continued the fall on Wednesday as the pullback over the last few weeks has been repudiated. The market is without a doubt overly bearish, and the bounce of late has simply been a set up to begin selling again. This is exactly what we have done, and hopefully you did too as we pointed out this move a few sessions ago.

The breaking of new lows can be used to either short or add to an existing short position in this market. The trend is massively bearish over the last couple of years, and this hasn’t changed. The $2.50 level has given way, and this leads us to believe that $2 is the next target for sellers. We don’t buy – at all.

Natural Gas Forecast May 31, 2012, Technical Analysis
Natural Gas Forecast May 31, 2012, Technical Analysis

Natural Gas Fundamental Analysis May 31, 2012, Forecast

Analysis and Recommendations:

Natural Gas continues to decline trading at 2.429 as investors continue to sell of and take profits, after weather conditions stabilized and the hurricane warnings passed. We are now down to season supply and demand and should see the prices settle near the 2.32-2.36 level as predicted in April.

Speculators did a good job talking up the markets while moving from Crude Oil they were able to push up the price of gas and take advantage of the markets. Oil was trading below 2.00 at a 10 year low just earlier this month, until speculators pushed it over the 2.80 level and then sold off.

Inventories this week are expected to be high and push prices down.

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.

WEEKLY

 

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

Date

Time

Currency

 

Previous

May 31

5:45

CHF

GDP q/q

0.1%

31st-3rd

EUR

German Retail Sales m/m

0.8%

6:45

EUR

French Consumer Spending m/m

-2.9%

7:55

EUR

German Unemployment Change

19K

9:00

EUR

CPI Flash Estímate y/y

2.6%

12:15

USD

ADP Non-Farm Employment Change

119K

12:30

USD

Prelim GDP q/q

2.2%

12:30

USD

Unemployment Claims

370K

13:45

USD

Chicago PMI

56.2

15:00

USD

Crude Oil Inventories

0.9M

Jun 1

TBD

GBP

Halifax HPI m/m

 

7:15

CHF

Retail Sales y/y

4.2%

7:30

CHF

SVME PMI

46.9

7:45

EUR

Italian Manufacturing PMI

43.8

8:30

GBP

Manufacturing PMI

50.5

9:00

EUR

Unemployment Rate

10.9%

12:30

USD

Non-Farm Employment Change

115K

12:30

USD

Unemployment Rate

8.1%

12:30

USD

Core PCE Price Index m/m

0.0%

12:30

USD

Personal Spending m/m

0.2%

12:30

USD

ISM Manufacturing PMI

0.3%

14:00

USD

S&P/CS Composite-20 HPI y/y

54.8

 

Crude Oil Weakened by Surging USD

This morning in early Asian session, WTI oil futures prices are trading below $90.50/bbl with fall of more than 0.30 percent in Globex electronic platform. Prevailing economic concern from Euro-zone is weighing on Global Financial market.

Most of the Asian equities are slumped driven by bearish sentiment from Euro-area. The seventeen nation’s currency Euro is trading  at 1.2468 with fall of more than  0.20 percent  as Spain pose a new threat for Euro-zone, which might be making oil prices to trade in lower side. We may expect oil prices to trade under pressure by taking negative cues from lower equity market and basically concern from Euro-zone. From economic data point, major confidence index from Euro-zone are expected to fall for the month of May. Thus, it may further weigh on Euro, which will ultimately drive oil prices lower side. From fundamental front, crude oil stocks level is likely to increase near 22 years high in the last week, whereas very minute draw down in petroleum stock is expected. Due to normal weather condition, summer demand is expected to fall as per US energy department, which may pressurize oil prices. As per National Hurricane Centre, there is no threat from tropical storm in North Atlantic Area. So, overall trend for oil prices is expected to under pressure.

Markets have been hurt by the Spanish woes of a destabilized banking. We therefore expect the commodity sector to dip further amid the Euro plight. Concerns are now shifting from Greece to Spain where new bonds will be issued to fund the distressed lenders and indebted regions. This may feed in to more anxiety as the country’s refinancing ability may push borrowing cost to over 7%, a level that is unsustainable.

The European commission today will be setting out its strategy pointed for Spain and Italy to balance growth with fiscal consolidation. Besides, reports today from the Euro zone are likely to indicate an obstructive business climate, while the economic, consumer and industrial confidence may remain faint

 Currently, gas futures prices are trading above $2.496/mmbtu with a minute change of 0.30 percent in Globex electronic platform. We may expect gas futures prices to remain under pressure throughout the day on concern from declining consumption pattern by US consumer. There is no concern of tropical storm in Gulf areas, thus it may keep prices under pressure. Beginning of summer season may drive higher demand for Gasoline for summer driving demand which may weigh on the natural gas prices. ONGC is planning to increase its production which is another point for the lower side trend.

Natural Gas Forecast May 30, 2012, Technical Analysis

If you have been reading our articles and watching the videos, you know that the natural gas markets are some of the most bearish futures markets around the world at the moment. The Tuesday session saw a serious breakdown yet again, and if you took our analysis to heart, you are presently profiting from this massive down trend.

While many had predicted that the bottom was in, we stayed back and let this oversold market have its well needed bounce. To think that the commodity was going to fall straight to zero was wishful thinking, but it is obvious some of the weaker shorts in the marketplace had jumped out on this latest pop. The most obvious resistance point was $3 to us, and it wasn’t until we got over that level that we would even consider buying. Needless to say, we never did, so we never bought into the rally at all.

With supply being so heavy on this market, the fact is that price will be hard pressed to rise for any great length of time. It is now a situation where the ones that bought at the lows have to figure out if this is a pullback, or a resumption of the trend. History dictates that more often than not, the trend remains intact. It is from this perch that we look at the markets now.

While there is no 100% accurate way to predict price movements, the fact is that this market has been bearish for some time now. True, someday it will change trends, but the underlying fundamentals in this commodity haven’t changed at all. Because of this, to think that the natural gas markets were suddenly going to be the place to go long was wishful thinking.

The breaking of the daily low for Tuesday has this pair looking for the lows again. We are adding to our short position when this happens, and will also sell rallies that show weak candles on the hourly chart. We simply will not buy this market, as the trend has been so obvious.

Natural Gas Forecast May 30, 2012, Technical Analysis
Natural Gas Forecast May 30, 2012, Technical Analysis

Natural Gas Fundamental Analysis May 30, 2012, Forecast

Analysis and Recommendations:

Natural Gas fell today, as investors continued to take profits also on news that the gulf storm had dissipated. Natural Gas futures prices are trading below $2.584/mmbtu with fall of more than 2.5 . We may expect gas futures prices to remain under pressure throughout the day on concern from declining consumption pattern by US consumer. As per National Hurricane Centre, tropical storm Beryl dissipated and became tropical depression. Thus, concern of supply disruption declined in Gulf areas, which may also limit the gains in gas prices. Beginning of summer season may drive higher demand for Gasoline for summer driving demand which may weigh on the natural gas prices.

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 for May 29, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

May 29

 

JPY

 

 

 

Unemployment Rate 

4.6%

 

4.5% 

 

4.5% 

 

 

 

 

JPY

 

 

 

Retail Sales (YoY) 

5.8%

 

6.3% 

 

10.3% 

 

 

 

 

AUD

 

 

 

HIA New Home Sales (MoM) 

6.9%

 

 

 

-9.4% 

 

 

 

 

GBP

 

 

 

CBI Distributive Trades Survey 

21

 

-7 

 

-6 

 

 

 

 

EUR

 

 

 

German CPI (MoM) 

-0.2%

 

-0.1% 

 

0.2% 

 

 

 

 

EUR

 

 

 

German CPI (YoY) 

1.9%

 

2.0% 

 

2.1% 

 

 

 

 

USD

 

 

 

CB Consumer Confidence 

64.9

 

70.0 

 

68.7 

   

 

WEEKLY

 

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

Date

Time

Currency

 

Previous

May 30

7:00

CHF

KOF Economic Barometer

0.40

8:00

EUR

M3 Money Supply y/y

3.2%

8:30

GBP

Net Lending to Individuals m/m

1.4B

14:00

USD

Pending Home Sales m/m

4.1%

23:01

GBP

GfK Consumer Confidence

-31

May 31

5:45

CHF

GDP q/q

0.1%

31st-3rd

EUR

German Retail Sales m/m

0.8%

6:45

EUR

French Consumer Spending m/m

-2.9%

7:55

EUR

German Unemployment Change

19K

9:00

EUR

CPI Flash Estimate y/y

2.6%

12:15

USD

ADP Non-Farm Employment Change

119K

12:30

USD

Prelim GDP q/q

2.2%

12:30

USD

Unemployment Claims

370K

13:45

USD

Chicago PMI

56.2

15:00

USD

Crude Oil Inventories

0.9M

Jun 1

TBD

GBP

Halifax HPI m/m

 

7:15

CHF

Retail Sales y/y

4.2%

7:30

CHF

SVME PMI

46.9

7:45

EUR

Italian Manufacturing PMI

43.8

8:30

GBP

Manufacturing PMI

50.5

9:00

EUR

Unemployment Rate

10.9%

12:30

USD

Non-Farm Employment Change

115K

12:30

USD

Unemployment Rate

8.1%

12:30

USD

Core PCE Price Index m/m

0.0%

12:30

USD

Personal Spending m/m

0.2%

12:30

USD

ISM Manufacturing PMI

0.3%

14:00

USD

S&P/CS Composite-20 HPI y/y

54.8

Government Bond Auctions

Date  Time  Country 

May 30  09:10  Italy

May 30  09:10  Sweden 

Crude Oil and Natural Gas Outlook

The euro was poised for the biggest monthly decline since September, before a sale of Italian debt tomorrow and data this week forecast to confirm that the prolonged debt crisis is hurting the region’s economy. The 17-nation currency was 0.2 percent from the lowest since July 2010 after yield premiums on Spain’s securities over Germany’s rose to the most in 17 years. Italy is scheduled to sell 3.5 billion Euros ($4.4 billion) of five-year notes and 2.75 billion Euros of 10-year.

Oil rose for a third day in New York as speculation that U.S. economic growth will boost fuel demand in the world’s biggest crude consumer countered concern Europe’s debt crisis will worsen. Crude for July delivery climbed as much as $1.13 to $91.99 a barrel. WTI Crude Oil is currently trading at $91.20 per barrel.

This morning in early Asian session, WTI oil futures prices are trading above $91/bbl with gain of more than 0.40 in electronic platform. Oil prices continued the positive trend by taking cues from higher trading Asian equities and speculation of US economic growth. Most of the Asian equities are opened on higher note with optimism from Greek support for Pro-austerity parties. Other side, concern from Spain’s banking sector is weighing on the seventeen nation currency Euro, which is trading below 1.252 levels with fall of more than 0.10 percent.  Spain’s borrowing cost for 10 year’s increased by 7 percent and the risk premium of Spanish Government bond over German bond climbed up .Thus, the euro is likely to be under pressure which may limit the gains in oil futures prices. From economic front, German’s import price index is likely to fall for the month of April which may reflect on lower CPI in May month. Thus, Euro may gain some points during European session. Likewise, from US consumer confidence level reading is expected to increase. Rise in manufacturing activities in May come with higher number for Dallas Fed Manufacturing index. Thus, oil prices may trade on higher side on the back of positive economic data expectation. As per National Hurricane Centre, tropical storm Beryl dissipated and became tropical depression. Thus, concern of supply disruption declined in Gulf areas, which may also limit the gains in oil prices. Overall, price trend looks upside with limited gains.

Natural Gas futures prices are trading below $2.561/mmbtu with fall of more than 2.5 percent in electronic trading. We may expect gas futures prices to remain under pressure throughout the day on concern from declining consumption pattern by US consumer. As per National Hurricane Centre, tropical storm Beryl dissipated and became tropical depression. Thus, concern of supply disruption declined in Gulf areas, which may also limit the gains in gas prices. Beginning of summer season may drive higher demand for Gasoline for summer driving demand which may weigh on the natural gas prices.

Natural Gas Forecast May 29, 2012, Technical Analysis

The natural gas markets fell during the holiday session on Monday. The continued weakness didn’t seem to be bothered by the fact that the Americans were celebrating Memorial Day and most firms were away for the day. The fact that we have cleared the $2.60 level for the session close tells us that a break of the lows on Monday is a signal to start selling this beaten down commodity again. Buying isn’t even a possibility as the supply is far too strong for demand. The trend is most certainly still down, and we think that a retest of the lows could happen, given enough time.

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

Natural Gas Fundamental Analysis May 29, 2012, Forecast

Analysis and Recommendations:

Natural Gas continued to fall trading at 2.55 in a very quiet and light volume session. US markets are closed for the Memorial Day holiday and NG is primarily a US commodity that is not exported overseas or imported so it moves in relationship to supply and demand and the value of the USD. In earlier trading the DI fell slightly, pulling down the price of NG. There is no eco data and little news flow today

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.

WEEKLY

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

Date

Time

Currency

 

Previous

May 29

All Day

EUR

German Prelim CPI m/m

0.2%

10:00

GBP

CBI Realized Sales

-6

13:00

USD

S&P/CS Composite-20 HPI y/y

-3.5%

14:00

USD

CB Consumer Confidence

69.2

May 30

7:00

CHF

KOF Economic Barometer

0.40

8:00

EUR

M3 Money Supply y/y

3.2%

8:30

GBP

Net Lending to Individuals m/m

1.4B

14:00

USD

Pending Home Sales m/m

4.1%

23:01

GBP

GfK Consumer Confidence

-31

 

Natural Gas Forecast for the Week of May 28, 2012, Technical Analysis

The natural gas markets fell during the previous five sessions, and the $2.80 level looks as if it has repelled buyers, helped undoubtedly by the fact that the $3 level above is going to be highly resistive.

The trend is obviously bearish, so we like taking this signal as an expression of true market sentiment. The commodity is obviously is bearish overall, and as a result we don’t buy it at all. In fact, until we close above the $3 level, we simply don’t look for the opportunity to buy. However, rallies are faded on signs of weakness, and new lows embraced with selling positions. We are selling a break of the lows from last week, as it should signal continued weakness.

 

Natural Gas Forecast for the Week of May 28, 2012, Technical Analysis
Natural Gas Forecast for the Week of May 28, 2012, Technical Analysis

Natural Gas Forecast May 28, 2012, Technical Analysis

The natural gas markets fell on Friday as the recent consolidation area gave way to the bears. The move is a reminder that the trend is still most certainly down, and the rally would still have a long way to go in order to change that fact.

The trend line break of the session suggests that we are going to see lower prices in the near term, and as a result we are willing to sell on a break of the lows from Friday. The $2.60 level is a support level, so we may even give the trigger price a little leeway to be under that price as well. None the less, we still feel that the market is going to go much lower, as the fundamentals in this commodity simply don’t make for a bullish market.

The supply of natural gas is enormous, and the US alone has over 14 trillion cubic feet of proven natural gas reserves. This doesn’t even include Canada, which is thought to have a fairly comparable number. This simply makes for far too much supply in the world for demand to ever make the commodity rare.

However, we are entering the hurricane season in the Gulf of Mexico in the next week or so, and this could possibly have a bullish effect on prices in short increments as refineries may have to be shut down temporarily. None the less, those pops in prices will prove to be selling opportunities as well, as this market is a long way from becoming bullish for the longer term.

The low prices in natural gas have driven a lot of industrial names out of coal and into natural gas, but the move will sometimes cause slight rallies in this market as well. In essence, there are reasons to see this market rally from time to time, but the structural issues will remain: Far too much natural gas, not nearly enough demand. At the end of the day, this is by far the most important fundamental reason for price action.

We like selling a break of the lows for Friday, and wouldn’t consider buying until this market clears the $3 hurdle. Until then, we only sell rallies and breakdowns – like the one we are starting to see here.

 

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