• 14 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 16 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 18 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 20 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 22 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 23 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 4 days Texas Shutters More Coal-Fired Plants
  • 4 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 4 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 4 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 5 days Husky Energy Set To Restart Pipeline
  • 5 days Russia, Morocco Sign String Of Energy And Military Deals
  • 5 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 5 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 5 days India Needs Help To Boost Oil Production
  • 5 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 5 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 5 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 5 days District Judge Rules Dakota Access Can Continue Operating
  • 6 days Surprise Oil Inventory Build Shocks Markets
  • 6 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 6 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 6 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 6 days Oil M&A Deals Set To Rise
  • 6 days South Sudan Tightens Oil Industry Security
  • 7 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 7 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 7 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 7 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 7 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 7 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 7 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 7 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 8 days Kurdish Independence Could Spark Civil War
  • 8 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 8 days The Capital Of Coal Is Looking For Other Options

Natural Gas Analysis for the Week of November 14, 2011

Natural gas futures continued to fall on the weekly chart. Last week the January contract took out three week’s worth of bottoms to set another contract low. The break in the market was so severe that it allowed prices to catch up with a pair of steep downtrending Gann angles at 4.469 and 4.317 this week.

A decline back under these angles will put the market in an extremely weak position and indicate that the market is likely to continue to fall at a rate of about .08 per week. A break of this magnitude indicates growing pessimism triggered by an overabundance of supply and weak demand.

In addition to continual increases in supply, mild weather conditions are also wreaking havoc on the market. The approaching winter season should lead to increased demand but mild conditions are making this a moot point. With the short-term forecast calling for average-to-above average temperatures, demand is expected to remain below normal. This can only mean lower prices to follow.

With traditional fundamentals pointing toward lower prices and the number of new short positions growing, traders should start to watch for a short-covering rally triggered by oversold conditions. With analysts continuing to use words such as “pessimism”, “supply glut” and “oversupply” as prices reach severe lows; counter-trend traders have to begin to wonder if this market is getting close to turning around because of oversold sentiment.

According to the U.S. Energy Information Administration’s latest figures, stored gas supplies grew by 37 billion cubic feet. With supply on path to exceed last year’s record, this trend is going to have to stop before prices can at least stabilize. This is not likely to occur, however, as long as gas produced as a by-product of shale oil production continues to be virtually free. This means that the demand side of the equation is likely to be the major factor in determining when and how much natural gas prices can rally.

With supply expected to continue to grow and demand not expected to be a factor until the weather turns cold or short traders decide to take profits, look for the trend to continue down. Even if a short-covering rally begins, traders may be better off waiting for the rally to refresh their shorts. There just seems to be more opportunity to the downside at this time.

Factors Affecting Natural Gas This Week:

Weather:  Mild weather is expected to keep pressure on the market. A prolonged cold snap in a major natural gas consuming area may only trigger a short-term short-covering rally.

Supply and Demand:  Excessive production by shale-oil producers is likely to keep the pressure on prices. As long as this type of production continues to increase and the cost of producing gas remains virtually nothing, look for these companies to continue to dump supply.

Oversold Conditions:  This is the wildcard. No one is certain what “oversold conditions” are. Is it a chart level? Is it a number on a technical sentiment gauge? Will it be a hedge fund that just decides to redeploy its funds elsewhere? The best sign of an impending short-covering rally will be a technical closing price reversal bottom.

By. FX Empire

FXEmpire.com is the Forex flagship site of the FX Empire Network. The FX Empire Network provides readers with the most expert and most timely technical analyses, fundamental analyses and news-pieces; this in order to empower them to make for themselves the best possible financial decisions. The FX Empire Network’s other flagship sites include: StocksEmpire.com and CommoditiesEmpire.com.




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News