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 traded between a low of 2.006 and a high of 2.293 and closed the week at 2.196 as a cold front continued to cover the northeast. The last hope for the use of season natural gas. President Obama’s administration is spearheading a new program to develop easy transportation and exportation methods of NG, to increase demand.

Date

Last

Open

High

Low

Change %

Apr 27, 2012

2.196

2.126

2.197

2.108

3.32%

Apr 26, 2012

2.125

2.184

2.293

2.123

-2.75%

Apr 25, 2012

2.185

2.076

2.199

2.061

5.28%

Apr 24, 2012

2.075

2.114

2.119

2.062

-1.77%

Apr 23, 2012

2.113

2.041

2.114

2.006

3.53%

The EIA supply report for this week indicated:

Working gas in storage was 2,548 Bcf as of Friday, April 20, 2012, according to EIA estimates. This represents a net increase of 47 Bcf from the previous week. Stocks were 872 Bcf higher than last year at this time and 908 Bcf above the 5-year average of 1,640 Bcf. In the East Region, stocks were 450 Bcf above the 5-year average following net injections of 42 Bcf. Stocks in the Producing Region were 350 Bcf above the 5-year average of 691 Bcf after a net injection of 1 Bcf. Stocks in the West Region were 107 Bcf above the 5-year average after a net addition of 4 Bcf. At 2,548 Bcf, total working gas is above the 5-year historical range.

Historical:

High 5.13 January 2011

Low 2.2080 March 13, 2012

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)

Originally posted here