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.
Analysis and Recommendation:
Natural Gas Weekly Fundamental Analysis March 16-24, 2012, Forecast
Natural gas is trading at 2.3340, after falling to an historic low of 2.2080 earlier in the week. Winter is over, there is little demand for NG and there are sufficient inventories. NG should find a bottom between 2.32 and 2.36 and sit there through spring. There is little to no economic news to help move the price outside of the weekly inventory reports. There is no weather changes expected.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended March 9 fell by 64 billion cubic feet, after declining by 80 billion cubic feet in the preceding week.
Analysts had expected U.S. natural gas storage to drop by 58 billion cubic feet.
Inventories fell by 60 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 79 billion cubic feet, according to U.S. Energy Department data.
Total U.S. natural gas storage stood at 2.369 trillion cubic feet as of last week. Stocks were 735 billion cubic feet higher than last year at this time and 807 billion cubic feet above the five-year average of 1.562 trillion cubic feet for this time of year.
High 5.13 January 2011
Low 2.208 March 13, 2012
Economic Events: (GMT)
- This Week in PetroleumRelease Schedule: Wednesday @ 1:00 p.m. EST (schedule)
- Gasoline and Diesel Fuel UpdateRelease Schedule: Monday between 4:00 and 5:00 p.m. EST (schedule)
- Weekly Petroleum Status ReportRelease Schedule: The wpsrsummary.pdf, overview.pdf, and Tables 1-14 in CSV and XLS formats, are released to the Web site after 10:30 a.m. (Eastern Time) on Wednesday. All other PDF and HTML files are released to the Web site after 1:00 p.m. (Eastern Time) on Wednesday. Appendix D is produced during the winter heating season, which extends from October through March of each year. For some weeks which include holidays, releases are delayed by one day. (schedule)
- Heating Oil & Propane Update (October-March) Heating Oil, Propane Residential and Wholesale Price DataRelease Schedule: Wednesday at 1:00 p.m. EST
- Weekly Coal ProductionRelease Schedule: Thursday by 5:00 p.m. EST
- Weekly NYMEX Coal FuturesRelease Schedule: Monday by 5:00 p.m. EST
- Coal News & MarketsRelease Schedule: Monday by 5:00 p.m. EST
- Natural Gas Weekly UpdateRelease Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)
- Weekly Natural Gas Storage ReportRelease Schedule: Thursday at 10:30 (Eastern Time) (schedule)
Natural Gas Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3