• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 1 hour Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 5 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 2 hours Will Uncle Sam Step Up and Cut Production
  • 7 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 8 hours Continental Resource's Hamm (Trump Buddy) wants shale to cut production.Can't compete with peers. Stock will drop in half again.
  • 20 hours US Petroleum Demand Strongest Since 2007
  • 20 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 19 hours Movie Script: Epstein Guards Suspected Of Falsifying Logs
  • 8 hours Strait Of Hormuz As a Breakpoint: Germany Not Taking Part In U.S. Naval Mission
  • 3 hours Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 2 hours Why Oil is Falling (including conspiracy theories and other fun stuff)
  • 3 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
Alt Text

Kurdistan’s Massive Gas Reserves No One Knows About

The announcement of independent driller…

Alt Text

Is Big Oil's Natural Gas Bet Turning Sour?

Big Oil has been piling…

Commodities Mansion

Commodities Mansion

For further reading about Crude Oil and Gold go to CommoditiesMansion.com.CommoditiesMansion.com is a part of the Finance Mansion network which operates thousands of global financial…

More Info

Premium Content

Natural Gas Analysis for the Week of July 25, 2011

The spike in September Natural Gas futures came to an abrupt ending early last week as weather forecasts took out the chance for an extended heat wave across the United States. The short-covering rally triggered by excess demand briefly breached a minor 50% price level at 4.327, reaching 4.586 before selling off. The inability to attract fresh buying and the quick ending to the rally is a solid example of just how much supply is out there.

Without weather to steer the market higher, expectations are for the market to continue to trade sideways-to-lower over the near-term. Taking excessive heat out of the equation means a return to seasonally normal weather and a return to normal electricity demand.

Natural gas price movements

Also driving prices lower last week was the news that the U.S. Energy Information Administration reported a rise in natural gas storage of 60 billion cubic feet. This was above the pre-report consensus estimate of 58 billion cubic feet.

Traders also reacted negatively to rising production levels. A report from the industry research group Baker Hughes said that the number of active drilling rigs increased to 889 from 885. This was the highest level in eleven weeks and the fourth gain in five weeks. As long as the rig count remains well above the 800-level, there should be an overbalance of supply in the market.

Technically, solid support remains at 4.067 to 4.012. On the upside, the market is not expected to exceed 4.539 to 4.65 over the near-term.

Factors Affecting Natural Gas This Week:

• Although the weather has shifted to more seasonal temperatures and the forecasts are calling for much of the same going forward, the unpredictable nature of this year’s summer weather means that short traders have to continue to approach this side of the market with caution. Any change in the forecast to another round of high temperatures could send shorts scrambling to cover positions once again. Excessive heat puts more strain on electricity plants, creating more demand to meet air conditioning needs.

• On Thursday, the U.S. EIA will release its weekly inventory figures. Traders expect to see a slight increase in demand because this report will cover the excess usage caused by the Midwest and East Coast heat waves. The question remains whether new supply was able to offset this increase in demand.

• It’s a long-shot, but problems increasing the U.S. debt ceiling may exert pressure on the Natural Gas market. The threat of default of U.S. debt obligations could freeze credit markets, triggering a sharp rise in short-term interest rates. This could lead to manufacturing plant shut-downs, slashing demand and driving up supply. Prices would likely plunge on the news.

By. Commodities Mansion

For further reading about Crude Oil and Gold go to CommoditiesMansion.com.
CommoditiesMansion.com is a part of the Finance Mansion network which operates thousands of global financial websites. Our goal is to provide our readers with the experts' articles, reviews, charts, analysis and more in order for you to make more educated financial decisions. Therefore we always seek for the most recent and accurate information about Finance, Forex, Stocks, Indices, Futures, Commodities (Gold, Oil Price, Natural Gas etc.), ETFs, Bonds and Options.




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play