Natural
Natural Gas Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

Natural Gas Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

Economic Events: (GMT)

These are the significant reports this week in the US. See daily forecasts for more detail

Jan. 25

19:15 USD Interest Rate Decision

19:15 USD FOMC Statement

Jan. 26

13:30  USD Core Durable Goods Orders (MoM)

13:30 USD Initial Jobless Claims

15:00 USD New Home Sales

Jan. 27

13:30 USD GDP (QoQ)

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.

Analysis:

There is no story or trade here, unless you think Natural Gas has bottomed.

Last weeks inventory remained as forecast and the weatherman continues to predict a mild winter, this the warmest winter in the last 100 years, only 4 winters in that period have been recorded warmed.

With the days drawing quickly by, Natual Gas will continue to remain at the bottom, but no one knows the actual bottom. This historical low was at 2.28. which was hit on Friday and Natural Gas was trading at 2.3920, perhap it was a good buy, we will have to see what happens Monday

After dropping all week Natural Gas made an upswing on Friday as investors took a chance of a cheap buy. We will have wait and see.

Natural Gas Pivot Points (Time Frame: 1 Day)
 

Name S1 S2 S3 Pivot R1 R2 R3

Classic
2.2700
2.2405
2.1980
2.3125
2.3420
2.3845
2.4140

Fibonacci
2.2850
2.2680
2.2405
2.3125
2.3400
2.3570
2.3845

Camarilla
2.2929
2.2863
2.2797
2.3125
2.3061
2.3127
2.3193

Woodie's
2.2635
2.2372
-
2.3093
2.3355
2.3813
-

DeMark's
2.3272
-
-
-
2.2553
-
-