Natural Gas-Bottom pickers still trying to pick a bottom.
Last week March 2012 Natural Gas opened Monday January 30 at 2.810 and closed the week at 2.499. On the first trading day of January March 2012 Natural Gas opened at 2.986.
Look at the below fundamentals of natural gas taken from the EIA.gov website. We are dealing with record high inventories and the warm winter weather has not helped with demand. Living in Chicago I know my January heating bill was much lower than last January, and I am not complaining.
On January 23 we saw this market look to be starting a ride up. What caused this? Actually Chesapeake Energy Corp., a large natural gas producer, announced plans to cut back production. Market came up a tested 2.800 for a number f days then headed back down.
On the daily chart below we see ADX numbers dropping showing a weakening trend. ADX was over 60 before the Chesapeake announcement.
+DI and -DI are both dropping. MACD did croos up over the signal line on January 23 and did add some divergence. That was short lived as now divergence has dropped. Stochastics corrected from deep oversold territory and today are mid-range and pointing up. Check out when Trends in Futures issued a sell signal. Not bad for two months of work.
On the weekly chart take a real good look at what is really happening with big money by analyzing the COT Disaggregated report. See how Swap Dealers and Managed Money are posturing right now. Can you not see what will need to happen to truly start Natural Gas heading up?
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Fundamental (data from EIA.gov)
The forecast of average household heating expenditures for all heating fuels has been lowered from the first forecast for the current winter published in the October 2011 Outlook, primarily as a result of the warm first half of this heating season. Average household heating oil expenditures are now expected to increase by 4 percent this winter heating season (October 1 to March 31) compared with last winter. In contrast, natural gas and propane expenditures are projected to decline by 7 percent and 1 percent, respectively, and electricity expenditures are 2 percent lower than last winter's levels.
Natural gas working inventories continue to set new record highs and ended December 2011 at an estimated 3.5 trillion cubic feet (Tcf), about 12 percent above the same time last year. EIA's average 2012 Henry Hub natural gas spot price forecast is $3.53 per million British thermal units (MMBtu), a decline of almost $0.50 per MMBtu from the 2011 average spot price. EIA expects that Henry Hub spot prices will average $4.14 per MMBtu in 2013.
