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 ended the week down at 2.618 as investors took profits and the higher then expected inventory shut down investor’s interests as they sold off the commodity. Working natural gas in storage rose last week to 2,744 billion cubic feet (Bcf) as of Friday, May 18, according to EIA’s Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 77 Bcf for the week positioned storage volumes 750 Bcf above year-ago levels.
Due to the extreme low price, natural gas rigs are currently down about 31 percent from their level at the same time last year, while oil rigs have risen by 45 percent over the same period. However, increased productivity from shale gas formations (generated by horizontal drilling and hydraulic fracturing) and rising associated production from expanding oil-directed development activity have helped maintain robust natural gas production.
The combination of one of the warmest winters (November-March) in decades and low spot natural gas prices contributed to low wholesale electric prices at major market locations during the winter of 2011-2012 (see chart below). Warm weather kept electric system load low across the East Coast and helped dampen the need for coal-fired generation. Natural gas generation was up significantly to take advantage of low natural gas prices. Reduced nuclear generation due to outages and reduced hydropower generation both served to moderate declining electricity prices in much of the country.
Temperatures in the lower 48 States during the week ending May 17 were 2.6 degrees warmer than the 30-year normal temperature and 4.9 degrees warmer than the same period last year. The average temperature in the lower 48 States was 64.3 degrees, 2.6 degrees higher than the 30-year normal of 61.7 degrees. While overall temperatures were a few degrees warmer than normal, temperatures but temperatures remained in a moderate range without increasing demand for electricity.
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 up to the data analysis and information in our weekly reports.
Historical:
High 5.13 January 2011
Low 1.903 April 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)
Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD
|
Date |
Time |
Currency |
Previous |
|
|
May 28 |
23:30 |
JPY |
Household Spending y/y |
3.4% |
|
23:50 |
JPY |
Retail Sales y/y |
10.3% |
|
|
May 29 |
TBD |
AUD |
HIA New Home Sales m/m |
-9.4% |
|
13:00 |
USD |
S&P/CS Composite-20 HPI y/y |
-3.5% |
|
|
14:00 |
USD |
CB Consumer Confidence |
69.2 |
|
|
22:45 |
NZD |
Building Consents m/m |
19.8% |
|
|
May 30 |
1:30 |
AUD |
Retail Sales m/m |
0.9% |
|
1:30 |
AUD |
Construction Work Done q/q |
-4.6% |
|
|
14:00 |
USD |
Pending Home Sales m/m |
4.1% |
|
|
23:50 |
JPY |
Prelim Industrial Production m/m |
1.3% |
|
|
May 31 |
1:00 |
NZD |
NBNZ Business Confidence |
35.8 |
|
1:30 |
AUD |
Building Approvals m/m |
7.4% |
|
|
1:30 |
AUD |
Private Capital Expenditure q/q |
-0.3% |
|
|
1:30 |
AUD |
Private Sector Credit m/m |
0.4% |
|
|
1:30 |
JPY |
Average Cash Earnings y/y |
1.3% |
|
|
12:15 |
USD |
ADP Non-Farm Employment Change |
119K |
|
|
12:30 |
USD |
Prelim GDP q/q |
2.2% |
|
|
12:30 |
USD |
Unemployment Claims |
370K |
|
|
13:45 |
USD |
Chicago PMI |
56.2 |
|
|
15:00 |
USD |
Crude Oil Inventories |
0.9M |
|
|
23:50 |
JPY |
Capital Spending q/y |
7.6% |
|
|
Jun 1 |
12:30 |
USD |
Non-Farm Employment Change |
115K |
|
12:30 |
USD |
Unemployment Rate |
8.1% |
|
|
12:30 |
USD |
Core PCE Price Index m/m |
0.2% |
|
|
12:30 |
USD |
Personal Spending m/m |
0.3% |
|
|
14:00 |
USD |
ISM Manufacturing PMI |
54.8 |
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Originally posted here
