Energy / Natural Gas

• Fracking Coming to the UK Following Massive Natural Gas Discovery in Lancashire

  Energy-rich Britain is about to be subjected to a full court media press after Cuadrilla Resources announced that it has discovered huge underground deposits of natural gas in Lancashire, up to 200 trillion cubic feet of gas in all. For such an announcement in an economically depressed part of the British Isles, the announcement has generated a media buzz, with Cuadrilla Resources slyly announcing that if permission is received to develop the find, it could produce up to 1,700 new jobs, while meeting Britain’s future natural gas needs for more than the next fifty years. London is excited about the…

• Natural Gas Analysis for the Week of September 26, 2011

  The downtrend continued in Natural Gas last week as the November futures contract plunged to a new low for the year at 3.745. Bearish fundamentals and a weakening technical picture make it appear that this market is headed lower with only oversold conditions preventing a complete washout. With no visible support at this time, traders should continue to focus on the pair of downtrending Gann angles at 3.826 and 3.897. Although there was a penetration of these angles two weeks ago, the inability to close above them on a weekly basis means that the attempted breakout was most likely only…

• Natural Gas Analysis for the Week of September 19, 2011

  Like crude oil, November Natural Gas appeared to be set up for a strong surge to the upside and finish for the week, but supply came in much larger than expected, forcing prices to close near their low of the week. The weak close now has this market in a position to test the early September low at 3.903. Because of the strong downside momentum into the close, expectations are for this bottom to be penetrated fairly easily. With supply concerns continuing to bear down on the market, there would have to be a dramatic shift to turn this market…

• Natural Gas Analysis for the Week of September 12, 2011

  For the first time in seven weeks, natural gas futures failed to make a lower-low on the weekly charts. The inside week that was produced may be a sign of a shift in sentiment to the upside or at the least impending volatility. Although the November futures contract closed only slightly better, it appears to have withstood an onslaught of very bearish trading conditions. In addition to this, for the second consecutive week, it identified the key Gann angle which when finally taken out, is likely to lead to a strong breakout rally to the upside. The first sign of…

• Russia-Ukraine Honeymoon Over As Gas Dispute Deepens

  It all started with great fanfare last year in the Ukrainian city of Kharkiv, where Ukraine's newly elected President Viktor Yanukovych and his cheerful-looking Russian counterpart, Dmitry Medvedev, signed a sweeping agreement extending Russia's lease of a former Soviet naval base at the Black Sea port of Sevastopol. The Kremlin called it historic. The deal reversed the policies of Yanukovych's pro-Western predecessors, under whom diplomatic relations with Moscow were all but cut off. In return, Russia gave Ukraine a temporary discount on the amount it paid for Russian natural gas, easing a landmark 10-year agreement reached in 2009 that some…

• Natural Gas Analysis for the Week of September 5, 2011

  After spiking up to 4.13 after the release of last week’s inventory report and on speculation of a production shutdown because of a hurricane in the Gulf of Mexico, natural gas futures fell sharply. The trigger for the break was Friday’s bleak U.S. Non-Farm jobs report. Technically, if one looks at the market over the past month, natural gas appears to be forming a support base although there is a bias to the downside. Since peaking in June, natural gas has walked down an important Gann angle from the 5.01 top. Last week, this Gann angle stopped the rally at…

• Natural Gas Prices and the Bottom of the Resource Triangle

  Theoretically, we have a very large amount of resources of many kinds available–oil, natural gas, coal, uranium, gold, fresh water. There is a relatively small amount of high quality, inexpensive-to-extract resources, and we tend to extract those first. From there, we move to lower quality resources that are more expensive to extract. The question comes: How do we reach limits for the extraction of any of the resources? For oil, I have shown this chart:Figure 1. My version of the oil resource triangle. I recently explained what I think is happening with oil, as we are extracting lower and lower…

• New Update for U.S. Natural Gas Supplies in the Marcellus Shale Formation

  The Marcellus Shale formation that extends across eight U.S. states has a new estimate out from the US Geological Survey (USGS).  The new estimate of the reserve was increased from 42 times to 72 times from the previous assessment done in 2002.  Nine years will change a perspective. Before looking into this, keep in mind we’re looking through the work of the USGS, a department of the federal government.  As others have noted elsewhere the reliability of these kinds of things isn’t very high, rather they serve as pretty good guides over time on the resource availability by quantity.  What’s…

• Natural Gas Analysis for the Week of August 29, 2011

  Natural Gas futures remained under pressure last week as traders assessed the potential impact of Hurricane Irene on supply and demand. The consensus is that after the hurricane passes, temperatures are likely to drop, leading to less demand for natural gas. Supply is not expected to be affected at all because of the storm’s location. Technically, the market may be forming a support base, but there doesn’t appear to be a catalyst out there that would help trigger an upside breakout. The weekly chart indicates that last week produced another lower-low. At this point, it is going to take a…

• Natural Gas Analysis for the Week of August 22, 2011

  Last week October Natural Gas rebounded from a 5-month low to close off the low. Despite the comeback on Friday, the trend remains down with no sign of a change apparent over the near-term. According to last week’s inventory report, supply continued to increase, keeping a lid on any major advance. At this time it appears that weather is going to be the key factor that could drive this market higher. Both renewed heat in the southern half of the U.S. and tropical storms in the Gulf of Mexico could underpin this market and trigger a short-covering rally. Technically, the…