By FXEmpire.com

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 continued its journey higher on the back of lower inventory, increased demand, the lower USD and an overall upswing in commodities on Friday.

Natural Gas had been trading higher all week moving off of bottoms just last month in the 1.90 range, NG has been slowly building momentum. A lot has been riding on weather forecasts and seasonal demands. Last week it was announced that Japan was seeking approval from the EIA to export NG to Japan. The proposal in under consideration and is being looked at favorably with support of the Obama Administration. This would open a new avenue for Natural Gas and build a demand. The US has quickly become a world leader in the production of natural gas, but lags behind in demand.

Date

Last

Open

High

Low

Change %

Jun 29, 2012

2.822

2.751

2.832

2.717

2.66%

Jun 28, 2012

2.749

2.763

2.845

2.660

-0.51%

Jun 27, 2012

2.764

2.834

2.971

2.756

-2.40%

Jun 26, 2012

2.832

2.695

2.838

2.692

5.06%

Jun 25, 2012

2.695

2.721

2.773

2.683

-0.99%

Last year’s Tsunami left Japan without the capability to produce energy, with the closure of its nuclear plants and they have been looking for an easy cheap method for their needed energy source.

Also on Friday, the EU announced a new “plan” to contain and resolved the financial crisis with the zone. The new plan was unexpected and has been hailed by markets and traders. On Friday, commodities and all risk assets traded up on positive sentiments.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week of June 25 – 29 actual v. forecast for the US Dollar

Date

Currency

Event

Actual

Forecast

Previous

Jun 25

USD

New Home Sales

369K

347K

343K

Jun 26

USD

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

-1.9%

-2.4%

-2.6%

USD

CB Consumer Confidence

62.0

63.8

64.4

Jun 27

USD

Core Durable Goods Orders m/m

0.4%

0.9%

-0.6%

USD

Durable Goods Orders m/m

1.1%

0.5%

-0.2%

USD

Pending Home Sales m/m

5.9%

1.2%

-5.5%

USD

Crude Oil Inventories

-0.1M

-0.5M

2.9M

Jun 28

USD

Unemployment Claims

386K

385K

392K

USD

Final GDP q/q

1.9%

1.9%

1.9%

Jun 29

USD

Core PCE Price Index m/m

0.1%

0.2%

0.1%

USD

Personal Spending m/m

0.0%

0.1%

0.1%

USD

Chicago PMI

52.9

52.8

52.7

USD

Revised UoM Consumer Sentiment

73.2

74.2

74.1

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 Weekly Update
    Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)
  • Weekly Natural Gas Storage Report
    Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)

Click here for further Natural Gas Forecast.

Originally posted here