• 6 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 8 hours Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 10 hours Syrian Rebels Relinquish Control Of Major Gas Field
  • 11 hours Schlumberger Warns Of Moderating Investment In North America
  • 12 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 13 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 14 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 16 hours New Video Game Targets Oil Infrastructure
  • 17 hours Shell Restarts Bonny Light Exports
  • 18 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 1 day Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 1 day British Utility Companies Brace For Major Reforms
  • 1 day Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 1 day Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 2 days Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 3 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
Is OPEC Considering Deeper Output Cuts?

Is OPEC Considering Deeper Output Cuts?

You could argue OPEC and…

Iran Ready For OPEC Oil Deal Extension

Iran Ready For OPEC Oil Deal Extension

Iran is ready to take…

Natural Gas Market Forecast for the Week of January 30, 2012

Natural Gas Market Forecast for the Week of January 30, 2012

March Natural Gas formed a dramatic closing price reversal bottom last week, setting up the market for a 2 to 3 week rally equal to at least 50 percent of the last break from 3.7410 to 2.2890. This retracement target price is 3.0150. Further upside momentum could drive the market into the 61.8 percent price level at 3.1860. A closing price reversal does not mean the trend has changed, but indicates that selling pressure has subsided.

The key to any closing price reversal bottom is the follow-through rally. A trade through 2.8380 will be needed to confirm the bottom. Without the follow-through, the market is likely to retest the low.

A pair of downtrending Gann angles at 2.5550 and 2.6720 continues to control the short-term direction of the market; however, the market is in a position to crossover to the bullish side of these angles. If this occurs, then traders should look for a further rally into another downtrending Gann angle at 3.0210. Combined with the retracement zone, this angle creates a solid resistance cluster.

It wasn’t the weather or oversold conditions, but a statement by President Obama that sent the natural gas market higher last week. The policy shift by the White House in favor of greater gas development encouraged shorts to cover their positions and new speculators to explore the long side of the market.

“We have a supply of natural gas that can last America nearly 100 years,” Obama said during his Tuesday evening State of the Union address. “And my administration will take every possible action to safely develop this energy.”

This statement turned the market around and signaled a possible long-term bottom if the Obama administration follows through on its promise to provide natural gas producers with incentives to develop uses for the product.

Even with the possible shift in the administration’s energy policy, it may take years to convert the U.S. to total dependency on natural gas. This would include converting homes from oil to gas as well as motor vehicles. So while the industry took a week to celebrate the possible change, the fact remains that consumption cannot keep up with supply and that inventory currently sits near an all-time high.

With winter approaching the half-way point, producers are starting to become concerned that the winter season will end with a record amount of natural gas in storage. If production continues at its current pace, inventories may reach full capacity my May since consumption is expected to drop after winter ends.

The concern that natural gas drillers will continue to produce more gas than is being used was addressed last week when Chesapeake Energy Corp. announced it would cut production of dry gas in 2012 by as much as one-billion cubic feet per day. They were also considering reducing their drilling rig count.

If other producers decide to follow Chesapeake then we may have seen the bottom in natural gas. If another producer decides to pick up the slack then prices could stabilize and form a support base. So while the President’s statement may have been welcome news and an excuse to cover short positions, the real driver of higher prices will be a slash in production.

Factors Affecting Natural Gas This Week:

Weather:  The mild winter has led to low demand which is helping to drive up inventories. At this point, it doesn’t look like cold temperatures can save this market so the focus is shifting toward production controls. 

Supply and Demand:  Chesapeake Energy took the first swing at controlling production or supply, the market is waiting to see if other producers follow. Demand is low and likely to fall as spring approaches.

Oversold Conditions:  Traders seem to notice oversold conditions when the fundamentals turn bullish. In hindsight the market was oversold, but this condition could be taken care of following a 2 to 3 week rally.

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.
FXEmpire.com is updated daily with video based Technical Analyses, text based Fundamental Analyses and news-pieces. Our readers receive a review of the past week’s market activity coupled with an outlook for the upcoming week and regular market updates.



Join the discussion | Back to homepage

Leave a comment

Leave a comment

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