Natural Gas Forecast February 22, 2012, Technical Analysis

The natural gas markets fell during the session on Tuesday, but managed a bit of a bounce to form a hammer at the end of the session. The market looks set to continue consolidation, and the recently identified wedge pattern is still holding. The trend is down, so we certainly know that we want to sell this market, but the pattern still holds and keeps us flat.

The $3 level above should continue to be resistive going forward, so even on a break to the upside in this market we won’t buy. The trend has been far too bearish over the last year to argue with it, and as a result we truly hope for a break of the bottom of the wedge to sell. If not, we will sell the rallies as they come on signs of weakness going forward. With the spring coming in the United States, natural gas is about to hit its weakest traditional pricing period.

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

Natural Gas Fundamental Analysis February 22, 2012, Forecast

Economic Events: (GMT)

WEEKLY

 

Analysis and Recommendations:

Natural Gas is trading at 2.775 in today’s session as investors pulled profits after NG surged close to 20% in less then two weeks. Earlier in the day Natural Gas hit a high of 2.79, last week NG topped out at 2.81 after moving up from 2.36 earlier this month. Winter days are running short and warm weather is predicted. Gas was seeking a bottom when inventory reports last week showed it below forecast, non the less there is still no reason for NG to continue to climb.

Natural Gas Forecast February 21, 2012, Technical Analysis

The natural gas markets fell during the session on Monday as the bears reentered the markets. The market currently looks as if it is trying to form some kind of triangle or pennant, and as most consolidation patterns suggest continuation of the trend, we are watching this with great interest. The $3 level above should continue to be a “top” in the market, and as a result we only sell this commodity. A breakdown below the bottom of this triangle should be a massive sell signal, and any rallies going forward should be sold on weakness. We will not buy in a market that is so weak over the long term. 

Natural Gas Forecast February 21, 2012, Technical Analysis
Natural Gas Forecast February 21, 2012, Technical Analysis

Natural Gas Fundamental Analysis February 21, 2012, Forecast

Economic Events: (GMT)

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  • This Week in Petroleum
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Analysis and Recommendations:

Natural Gas is down a bit trading at 2.757 down from the opening of 2.807, where it skyrocketed to at the end of the week. Today’s decline is mostly profit taking after the incredible climb last week. Also news today, noted that problems brewing between Natural Gas producers and environmental groups. It made sense that environmentalists viewed the natural gas industry as an ally when they were trying to forge a climate deal on Capitol Hill in 2009 and 2010.

Environmental groups that once took money from Chesapeake Energy — or considered doing so — to make a common cause against coal power, have stepped back as they weigh the environmental perils of extracting natural gas from shale, a business in which Chesapeake Energy is a leader.

“When cap-and-trade was going through, they needed an alternative. . . . They saw it as the savior, and it’s anti-coal,” said in industry spokesman. But now, concerns about the chemicals used to tap shale gas have become more pressing as hydraulic fracturing activity has increased nationwide.

Natural Gas Weekly Fundamental Analysis February 20-24, 2012, Forecast

Economic Events: (GMT)

WEEKLY

                               

Historical:

High      5.13 January 2011

Low        2.29 January 20, 2011

Rule:

Natural gas is sometimes said to be the queen of all commodities, with Crude Oil being king. 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.

Trading natural gas is not for the faint hearted. Even by commodities standards, natural gas is a notoriously volatile market subject to wild price fluctuations.

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.

The average natural gas futures price for the upcoming winter is less than $4 per million British thermal units (MMBtu), the lowest level entering the winter since 2001-2002. The so-called “winter strip,” the average natural gas futures price for the contract months November through March as settled on the New York Mercantile Exchange (NYMEX), is a closely followed measure of market participants’ price expectations. In markets such as New England and California, where natural gas prices often set on-peak, wholesale power prices, the NYMEX winter strip for natural gas also can influence expectations for forward wholesale power prices.

Late October expectations for average winter natural gas prices have not been this low since the winter of 2001-2002. Winter price expectations, as reflected through the winter strip on NYMEX, peaked at almost $12 per MMBtu in 2005 in the aftermath of supply disruptions related to Hurricanes Katrina and Rita. Starting in 2009, late fall expectations for average winter natural gas futures prices dipped under $5 per MMBtu as domestic natural gas production from shale plays grew rapidly.

 Analysis and Recommendation:

Natural Gas is the outstanding mover of the week. For no express reason, except a drop in weekly inventory natural gas has climbed to 2.8320

Moving from a low of 2.36 a few weeks ago, natural gas has continued to surge. Weather is stable, inventories have fallen due to reduced production because of the low prices. Two weeks ago Chesapeake Energy announced the suspension of product due to high inventories, low demand and low prices.

 The EIA stated natural gas storage in the U.S. in the week ended February 10 fell by 127 billion cubic feet, after declining by 78 billion cubic feet in the preceding week. 

Inventories fell by 230 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 178 billion cubic feet, according to U.S. Energy Department data.

Natural Gas Forecast February 20, 2012, Technical Analysis

The natural gas markets had a very strong day on Friday as the support at $2.40 level continues to support the overall market. The market still remains under the $2.80 level though, and as a result we are hesitant to buy. Also, the $3 level looms fairly large above, and this is another potential trouble spot for the bulls. With this in mind, we like and prefer to trade with the overall trend, which is most decidedly down. The trend line that has been keeping this market down since November held for the day, so we also could see weakness here. With this line of thinking, we are selling rallies on the first sign of weakness at this point.

Natural Gas Forecast February 20, 2012, Technical Analysis
Natural Gas Forecast February 20, 2012, Technical Analysis

Natural Gas Forecast for the Week of February 20, 2012, Technical Analysis

Natural gas markets were positive for the week, gaining from the recent floor we have seen at the $2.40 level. The market is very weak over the longer-term, and the trend certainly hasn’t been changed by anything that has happen over the last week. However, there is a significant amount of support in this area, and as such we see it as a nice consolidation area.

Selling this market is the only position that a prudent trade can take at this point. The $3 level in our opinion is strong resistance waiting to happen. Because of this, we are willing to sell the market as we approach that area. The $2.80 level is also resistive, so for those that choose to be a bit more aggressive, you can use that as a guide. Buying isn’t even a thought at the moment.

Natural Gas Forecast for the Week of February 20, 2012, Technical Analysis
Natural Gas Forecast for the Week of February 20, 2012, Technical Analysis

Natural Gas Fundamental Analysis February 20, 2012, Forecast

Economic Events: (GMT)

US Markets are closed for the Presidents Day Holiday

WEEKLY

 

Analysis and Recommendations:

Natural Gas skyrocketed today, moving up to 2.732 and then settled at 2.700 up 13.4 by late Friday afternoon. The EIA stated natural gas storage in the U.S. in the week ended February 10 fell by 127 billion cubic feet, after declining by 78 billion cubic feet in the preceding week. 

Analysts had expected U.S. natural gas storage to drop by 126 billion cubic feet. 

Inventories fell by 230 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 178 billion cubic feet, according to U.S. Energy Department data.

This is the only news that has been effecting NG, combined with news a while back regarding Chesapeake Energy, there is not obvious signal as to what is pushing the prices.

Natural Gas Forecast February 17, 2012, Technical Analysis

 

The natural gas markets bounced on Thursday as the $2.40 level continues to hold as support. The market has be overly bearish, but the last several sessions have suggested that perhaps some big accounts are starting to take a shot on the future of the market. The area could be the start of a bounce, but the $2.60 level has been very resistive at the same time. In the mean time, we need to see which level gives way first in order to place our trade. A break to the upside has us looking for weakness at the $3 level, and a break of the $2.40 level has us selling as well. We do not buy natural gas.

Natural Gas Forecast February 17, 2012, Technical Analysis
Natural Gas Forecast February 17, 2012, Technical Analysis

Natural Gas Fundamental Analysis February 17, 2012, Forecast

Economic Events: (GMT)

WEEKLY

 

Analysis and Recommendations:

Natural Gas is at 2.568 up .143

Inventory data released today showed a drop in supply for the week of  10-Feb- EIA Natural Gas Storage -127 bcf to 2761 bcf. The price surge, is most likely temporary, inventories are still high with the winter season coming to a close. Price will probably fall in the next few days back to the 2.44 level and over the next month down to the 2.36 support.

 

Natural Gas Forecast February 16, 2012, Technical Analysis

Natural gas markets fell again on Wednesday as the market continues to chug along at a bearish tempo. The market is certainly in a massive bear market at this point, and as such we only sell natural gas. However, the $2.40 level continues to offer strong support, so selling at this point is difficult to do. The $2.60 level looks to be continued resistance, and as such we look a bit range bound at this point. The breaking below the $2.40 level is what we are currently waiting on to continue selling this market. Once the market closes below that level on a daily chart – we are short. Also, we would consider selling rallies if there are signs of weakness going forward.

Natural Gas Forecast February 16, 2012, Technical Analysis
Natural Gas Forecast February 16, 2012, Technical Analysis

Natural Gas Fundamental Analysis February 16, 2012, Forecast

Economic Events: (GMT)

WEEKLY

 

Analysis and Recommendations:

Natural Gas is down after opening at 2.544 NG has dropped to 2.429.

As the winter days wind down and as weather forecasters continue to be wrong about cold fronts hitting the North East and worries about inventories due on Thursday, investors were selling as NG kept searching for a bottom. It is destined to find that 2.36 level of earlier this month.

Yesterday Chesapeake Energy announced it would be selling off appx 12billion dollars of assets. NG is predicted to be the energy of the future, replacing coal, but that is still along way off, their might be future demand but at present there is little demand for available inventories.

Natural Gas Forecast February 15, 2012, Technical Analysis

Natural gas markets rose on Tuesday as the $2.40 area continues to offer fairly strong support in this market. The commodity has been sold off in massive amounts so far in 2012, and a break seems to be what many traders have in mind.

However, the supply of natural gas is simply too great in order for traders go think this market will suddenly enter a bullish phase. True, the winter has finally come to the northeastern part of the United States, but it will prove to be too little too late as the warmer temperatures are just around the corner. We are sellers on a daily close below $2.40, and on rallies that show signs of exhaustion.

Natural Gas Forecast February 15, 2012, Technical Analysis
Natural Gas Forecast February 15, 2012, Technical Analysis

Natural Gas Fundamental Analysis February 15, 2012, Forecast

Economic Events: (GMT)

WEEKLY

 

Analysis and Recommendations:

Natural Gas bucked the overall lower trend for energy and commodities to gain 4.2%. Natural-gas prices hovered at nine-year lows in recent sessions, fueling a rebound on Tuesday, trading  at 2.5446. There are all kinds of weather predictons and analyst comments on this one, but none that seem to make any sense. Inventories are high, the days of winter are counting down.

Natural Gas Forecast February 14, 2012, Technical Analysis

The natural gas markets fell slightly during the session on Monday as the traders simply cannot get excited about the prospects of this commodity overall. The supply continues to drown the demand as the new practices available has increased supply exponentially.

The recent price action suggests that perhaps the market is taking a well-needed break, but the $2.30 level seems to be the key at this point. The breaking of this level on a daily close will almost certainly have the market gunning for the $2 level, and as the highs continue to fade, this seems to be the direction we are heading. On a daily close below the above mentioned level – we are selling again. 

Natural Gas Forecast February 14, 2012, Technical Analysis
Natural Gas Forecast February 14, 2012, Technical Analysis

Natural Gas Fundamental Analysis February 14, 2012, Forecast

Economic Events: (GMT)

WEEKLY

 

Analysis and Recommendations:

Natural Gas  was on a crazy ride today, opening at 2.43 to end the day at almost the same point, trading now at 2.433 after dropping to a low of 2.396 and the hitting a high late morning at 2.47. All commodities and currency pairs seemed to do the same today, ending pretty close to their starts. It seems that Greece was effecting investors regardless of the market or the assets.

Natural Gas Weekly Fundamental Analysis February 13-17, 2012, Forecast

Economic Events: (GMT)

WEEKLY

                               

Historical:

High      5.13 January 2011

Low        2.29 January 20, 2011

Rule:

Natural gas is sometimes said to be the queen of all commodities, with Crude Oil being king.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.

Trading natural gas is not for the faint hearted. Even by commodities standards, natural gas is a notoriously volatile market subject to wild price fluctuations.

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.

The average natural gas futures price for the upcoming winter is less than $4 per million British thermal units (MMBtu), the lowest level entering the winter since 2001-2002. The so-called “winter strip,” the average natural gas futures price for the contract months November through March as settled on the New York Mercantile Exchange (NYMEX), is a closely followed measure of market participants’ price expectations. In markets such as New England and California, where natural gas prices often set on-peak, wholesale power prices, the NYMEX winter strip for natural gas also can influence expectations for forward wholesale power prices.

Late October expectations for average winter natural gas prices have not been this low since the winter of 2001-2002. Winter price expectations, as reflected through the winter strip on NYMEX, peaked at almost $12 per MMBtu in 2005 in the aftermath of supply disruptions related to Hurricanes Katrina and Rita. Starting in 2009, late fall expectations for average winter natural gas futures prices dipped under $5 per MMBtu as domestic natural gas production from shale plays grew rapidly.

Analysis and Recommendation:

Natural Gas closed the week at 2.476 down from last week when prices were driven up. The commodity continues to fall to find a bottom and might just hit earlier lows in the 2.36 range as winter draws to an end and inventories remain high. Even though suppliers are cutting production there is little demand for NG after winter.

The energy value moved this week based on weather forecasts which never materialized and profit taking as buyers had entered the markets in the 2.36-2.40 ranging hoping to push demand.

Natural Gas Forecast February 13, 2012, Technical Analysis

The natural gas market continues to show real weakness as the Friday session simply couldn’t gain any traction. The $2.40 level sits just below, and we feel that the area could continue to offer support, but it should give way eventually. The trend is strong, and there is absolutely nothing out there that would have us believe it is about to change.

The supply simply outweighs any demand that is out there, and the winter is about to turn over in the United States. In 6 weeks, demand will plummet in the largest population centers, and as a result – the price of this market should continue downward. We like selling rallies and new lows. The market looks like it is seeing resistance at every 20 cents, so a weak candle at $2.60, $2.80, and $3 has us interested in selling yet again.

Natural Gas Forecast February 13, 2012, Technical Analysis
Natural Gas Forecast February 13, 2012, Technical Analysis

Natural Gas Forecast for the Week of February 13, 2012, Technical Analysis

The week saw very little change once it was said and done in the natural gas markets. The $2.40 area continues to act as support, and we currently look like we are in consolidation. The market is extremely weak though, and the trend is definitely down. The market cannot be bought at this point in time, and we see a lot of downward pressure starting just above at $2.60 and going all the way to $3 for the short-term. Needless to say, the downward pressure continues much farther up the price scale than that, but this is the immediate area of concern. In order to continue our selling of this market, we need to see fresh lows. In the meantime, longer-term traders will have to wait.

Natural Gas Forecast for the Week of February 13, 2012, Technical Analysis
Natural Gas Forecast for the Week of February 13, 2012, Technical Analysis

Natural Gas Fundamental Analysis February 13, 2012, Forecast

Economic Events: (GMT)

WEEKLY

 

Analysis and Recommendations:

Natural Gas is closing out the week at 2.461 down slightly. NG pushed up earlier today on stories of potential cold in the Northwest. But this did not hold up. Days of winter are passing by quickly. After hitting a high of 2.52 NG continued to fall. The price was pushed down by last minute profit taking and held at 2.46 level by buyers looking at a cheap deal.

NG will most likely bounce around in the low 2.40 range before breaking under the 2.40 level while it seeks a bottom as spring rolls in.