Posts Tagged ‘Natural Gas’
Natural Gas Weekly Technical Outlook
Nymex Natural Gas (NG)
Initial outlook remains neutral this week as sideway consolidation from 4.975 might continue. Nevertheless, as noted before, natural gas has likely bottomed at 2.409 already. Downside of the consolidation should be contained above 3.635 support and bring rally resumption. Above 4.975 will target 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Nymex Natural Gas Continuous Contract Weekly Chart
Nymex Natural Gas Continuous Contract Monthly Chart
Weekly Fundamental Outlook for Energies and Metals – Commodities Consolidate as Economic Outlook is Mixed
Most of the commodities gyrated within their recent trading range last week as the broad market outlook remained mixed.
After a sharp fall to the lower end of the range in the previous week, WTI crude oil price rebounded although there was not much good news from the energy market. Although investors found better weekly fuel consumption as an excuse to boost price, it faltered below 71.5 amid weaker-than-expected job data.
Gold price continued to be directed by USD’s movement which reluctantly trended lower. Although we remain bearish on the dollar’s long term outlook, global central bankers’ unwillingness on dollar’s depreciation should prevent a sharp decline in USD in the near-term.
Crude Oil
Crude oil price plunged to as low as 68.32 Friday as the US Labor Department reported disappointing employment data for September. Investors worried the pace of economic recovery will be delayed and thus took profits from long positions in oil. Although buying interest emerged afterward, WTI crude oil settled -1.2% at 69.95 during the day. On weekly basis, the benchmark contract gained +6%.
After plummeting to the lower end of recent trading range of 65-75, oil price recovered in the middle of the week although the US Energy Department reported larger-than-expected crude builds in the week ended September 25. Investors used the surprising draw in gasoline stockpile, lower-than-expected rise in distillate stockpiles and rise in fuel demand as reasons to bid up prices.
However, we retain out views that crude oil price will continue move range-bounded in coming weeks and occasional rise in demand does not alter the fact that fuel consumptions remain in depressed levels.
Gasoline demand rose to 9.126M bpd last week, representing increases of +3.8% on weekly basis and +4.5% on annual basis. However, Exxon’s CEO said that gasoline demand has already peaked in 2007 and will decline into the futures. In the US, oil product demand was 20M bpd in 2007 and should fall to about 17M bpd by 2020.
Distillate demand climbed to 3.409M bpd after slipping for 3 consecutive weeks. However, current consumption level remained -12.3% below the same period in 2008. 4 week average of 3.387M bpd last week was still down -11.1% from a year ago. The incentive for refiners to switch production from gasoline to distillate is low as heating oil inventory stayed at sky-high level and refinery margins were low.
On the supply side, OPEC members should adhere more strictly to quotas although they seemed to be content with current oil price. According to a survey by Bloomberg, OPEC, the organization controlling 40% of the world’s oil exports, produced 28.395M bpd in September, representing a -0.05M bpd drop from August. The 11 member countries bearing quotas produced 26.045M bpd in total during the month, representing a -0.01M bpd decline from August. However, the output was still +1.2M bpd about the assigned target.
Rex Tillerson, Exxon’s CEO, commented that the OPEC should be more disciplined in their productions. He said that the cartel had been ‘extraordinarily good’ at sticking to the quotas and the compliance level had reached ’82% which is very good for OPEC’. However, ‘the compliance has reduced to 65% now. When the price of oil got back above 70, some people cannot help themselves’.
For non-OPEC countries, Russia’s total production increased +1.7% yoy to 10.01M bpd in September. This has brought the nation’s production to a post-Soviet high and at +25% above Saudi Arabia’s production.
Although the IMF upgraded their economic forecasts, hard data suggested that recovery came in weaker than expected. Non-farm payrolls in the US declined -263K in September, compared with consensus of -187K, following a -201K decline in the previous month. Unemployment rate rose to 9.8% as expected. The government also revised downward their preliminary estimate of benchmark payrolls by -0.6% (70K per month) in the 12 months through March.
Natural Gas
Nymex gas for November delivery rebounded +5.65 to settle at 4.72 after plunging 7.7% Thursday amid record high storage in the US. Downward pressure at cash market and stock market weighed on front-month contracts.
The Energy Department reported that gas stockpile rose +64 bcf to 3589 in the week ended September 25. According to the government, at current price level, ‘working gas in storage set a new record high for natural gas inventories. Current inventories exceed the previous 15-year-high reported on the Weekly Natural Gas Storage Report (WNGSR) of 3545 bcf, and the all-time high of 3565 bcf reported in the October 2007 Natural Gas Monthly. New record levels were established in the West and Producing regions, exceeding the previous records of 482 bcf and 1126 bcf in the WNGSR, respectively. Meanwhile, the East region is only 86 bcf below its previous 15-year high level of 2041 bcf established on November 14 2008′.
We are bearish on gas price in the near-term as rising gas storage will drag down prices in the cash markets which in turns pressure on futures prices.
Precious Metals
The complex continued to trade on currency factors, with the more volatile metals (silver, platinum and palladium) being more affected by strength in the dollar.
On Friday, gold price sank to as low as 987 as the dollar strengthened to 3-week high against the euro and crude oil and base metal prices got hit. The benchmark contract managed to rebound and close above 1000. On weekly basis, the yellow metal added +1.3% following a -1.9% decline in the previous week.
Next week, gold price will probably remain bounded below the record high level of 1033.9. In fact, we expect the yellow metal to continue to struggling around the 1000 level in the near-term. While we will have a light calendar in the US next week, meetings in RBA, ECB and BOE will have strong impact on currency movement.
In the long-term, we stay bullish on gold price as we are bearish on USD given the huge deficit and monetary easing policy in the country. According to IMF, USD’s share in global currency reserves fell to 62.8% in 2Q09 from 65% in the previous quarter. Euro’s share, on the other hand, rose to 27.5% from 25.9%. This is evidence showing USD’s status as the dominant reserve currency is threatened. Gold will be a beneficiary should central bankers continue to diversify away from the dollar. In fact, decline in European central banks’ gold sales and increase in emerging market’s reserve diversification suggest that central banks will switch from net gold seller to buying in coming years.
Net speculative long position in Comex gold future declined from the peak level to 454.6K contracts last week which that for silver continued to edge higher, despite at a much slower pace. Silver price added +1.1% to 16.23 last week, underperforming gold.
Base Metals
Most base metals headed lower in the past week amid demand concerns. While doubts over a potential recovery in OECD demand persist, a seemingly pause in Chinese stockpiling was the major cause of surge in inventory. More importantly, national day holidays in China will last until October 8 and investors prefer to stay on the sideline during the period.
Huge build in inventory level has made copper the most worrisome in the complex. Copper stockpiles in LME warehouses rose for the 12th consecutive week and have expanded +34% since the week ended July 10. This probably explained why the LME copper for 3 months’ delivery has declined for 5 straight weeks after making a 2009-peak at 6535 on September 8.
In the near-term, metal prices will remain under pressure as investors need to see solid evidence of demand recovery. Moreover, weak Chinese imports will continue to weigh on prices.
Source: Oil n Gold
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Natural gas’s pull back from 4.975 is still in progress and intraday bias remains neutral for the moment as some more consolidations could be seen. Nevertheless, as discussed before, a bottom should be formed at 2.409 already. Downside should be contained above 3.635 and bring rally resumption. Current rise is expected to continue towards 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Commodity Prices Retreat As Disappointing Eco Data Sent USD Higher
Although crude oil added +0.3% to settle at 70.82 Thursday, trading momentum was weakened as the US reported a series of disappointing data. Investors worried that economic recovery might not come as expected and thus drove capital away from risky assets.
US initial jobless claims increased to 551K in the week ended September 26 from 534K in the prior week. The market had anticipated a much more modest rise to 535K. After making a peak in March, initial jobless claims have dropped -18% in 26 weeks. However, the decline was rather gradual compared with previous recessions in 1970s and 1980s. The sluggishness in the falls in claims signals recovery in the job market is slow.
ISM manufacturing index slid to 52.6 in September from 52.9 in the previous month. The market forecast an improvement to 54. Although the index suggested manufacturing activities remained in expansion, decline in some components, such as new orders (Sep: 60.8; Aug: 64.9) and productions (Sep: 55.7, Aug: 61.9), indicated the sector remained vulnerable.
Stock market plunged as investors concern about the employment and growth outlook in the economy. The Dow Jones Industrial Average sank -2.1% to 9509 while S&P 500 Index lost -2.6% to 1030. Today in Asia, the MSCI Asia Pacific Index slips -2%. Japan’s Nikkei 225 Stock Average loses -2.7% to 9715 although the nation’s unemployment rate surprisingly fell to 5.5%, compared with consensus of an increase to 5.8%, in August from 5.7% a month ago. Japan’s household spending also unexpectedly gained +2.6% yoy in August after plummeting -2% in July.
The market’s focus is on US’ employment report today. Payrolls should have dropped -187K in September (-216K in August), sending the unemployment rate to 9.8% from 9.7% in August.
Gold price pulled back and closed below 1000 Thursday as USD rallied. Apart from uncertain economic outlook, the dollar advanced +0.65 against the euro because ECB President Trichet said that euro’s recent appreciation has been too much and disorderly movement in the currency market will have adverse impact on economy. The worst performers were commodity currencies in which Australian dollar, New Zealand dollar and Canadian dollar plunged -1.6%, -1.2% and -1.4% respectively.
Recent strength in gold price hurt physical demand. Besides India, Turkey reported that imports were down -86% mom to 1.7 metric tons in September. In the first months, total imports in the country were 32.9 metric tons, compared with 164.6 metric tons in the same period last year.
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Intraday bias in natural gas is turned neutral for the moment and some consolidations might be seen. Nevertheless, as discussed before, a bottom should be formed at 2.409 already. Downside should be contained above 3.635 and bring rally resumption. Current rise is expected to continue towards 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Outlook in natural gas remains unchanged. A bottom should be formed at 2.409 already and further rise is still expected as long as 3.635 support holds. Current rebound might extend further towards 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Commodities Strengthen as IMF Upgrades Credit Market Outlook
Crude oil price rebounds above 67 in European morning as USD retreats. IMF’s improved outlook on global credits, strong China PMI and Japan industrial output data also revive market expectations on economic recovery. In China, oil stocks plunge after the Chinese government reduced the ex-factory fuel prices.
In its semi-annual report, IMF cut its estimates for loan and investment write-downs by -15% to $3.4 trillion, suggesting improvement in global credit market and world economy. As stated in the report, ‘systemic risks have been substantially reduced following unprecedented policy actions and nascent signs of improvement in the real economy’. However, ‘credit channels are still impaired and the economic recovery is likely to be slow’. Banks’ losses on bad assets will probably increase by $470B, $420B and $140B from July 09 through next year in the Eurozone, the US and the UK respectively.
According to a survey done by HSBC, China’s manufacturing PMI slid 0.1 point to 55 in September from 55.1 in August. Despite the fall, a reading above 50 represented expansion and it’s the 6th consecutive month that the country’s manufacturing sector is in expansionary phrase. The official PMI, to be released tomorrow, is expected to have risen to 55 during the month from 54 in August.
In Japan, industrial production index rose +1.8% mom in August following an upwardly revised +2.1% increase in the prior month. On annual basis, the contraction of -18.7% was much lower than -22.7% recorded in July. Looking into the details, the shipment index for capital goods turned positive, gaining +1.9% qoq in July-August from -17% in April-June, for the first time in 2 years. This might be signaling that capex has almost bottomed as the shipment index for capital goods is usually a leading indicator for capex.
The Chinese government announced to reduce ex-factory prices of gasoline and diesel by RMB 190 a metric ton. Sinopec (0386.HK) and Petrochina (0857.HK) fell -1.4% to HK$ 6.59 and -1.6% to HK$ 8.76 respectively, underperforming -0.3% decline of the benchmark Hang Seng Index, as the cuts will hurt profit margins of refiners.
USD retreats against major currencies amid batter economic outlook as investors seek higher risks. Leading gains against the dollar were Australian dollar and New Zealand dollar. In Australia, retail sales rose +0.9% mom in August after falling -0.9% a month ago. The gain was higher than consensus of +0.5%. In New Zealand, NBNZ business confidence improved strongly to 49.1 in September from 34.2 in the prior month. Against the euro, the greenback weakens to 1.466 after rebounding to 1.453 Tuesday. The currency pair will likely record a decline of -4.7% in the third quarter, after gaining more than +5% in the second quarter.
Gold price climbs above 1000 again as the dollar plummets. No matter whether the yellow metal will close above 1000 today, it will likely record the biggest quarterly gain since 1Q2008. High gold price did exert pressure on jewelry demand. Imports by India, the world’s largest buyer, probably dropped for the 5th month in September, according to Bombay Bullion Association Ltd.
Source: Oil n Gold
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Developments in Natural gas continue to indicate that it has bottomed out at 2.409 already. Further upside is still expected as long as 3.635 support holds. Current rebound might extend further towards 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
While upside momentum in natural gas might be diminishing with bearish divergence conditions in 4 hours MACD, further rise is still in favor with 3.733 minor support intact. Break of 4.162 key near term resistance will solidify the case that Natural gas has bottomed out and bring further rise towards 4.575 resistance next. On the downside, below 3.733 will indicate that a short term top is in place and bring pull back first.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. With daily MACD staying positive, a short term bottom should at least be in place at 2.409. Also, such development argues that fall from 13.69 might have completed after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. Break of 4.162 resistance will affirm this case and bring stronger rally to test 55 weeks EMA (now at 4.76) and then 38.2% retracement of 13.69 to 2.40 at 6.71. Nevertheless, another fall could still be seen as long as 4.162 holds. Still, we’d expect strong support from 1.96 (02 low) to finally conclude the whole decline from 13.69.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Commodity Prices Remain Soft in Asia Monday
Although still trading above 65, crude oil’s near-term outlook remains weak as investors worry about energy consumption. Decline in stock prices in Asia market and rebound in USD exert additional pressure on commodities. Others in the energy complex extend further to the downside with RBOB gasoline and distillate trading at 1.61 and 1.67 respectively.
Stock markets in Asia drop Monday in response to the worse-than-expected US durable goods orders reported last week. Moreover, strength in Japanese yen against the dollar also weighs on Japanese stocks. The Nikkei 225 Stock Average slips -2.7% to 9985 as exports will be seriously affected by a stronger yen. Japanese yen rises to 88.5 against the dollar, the highest level in 8 months amid speculations that the Japanese government will not intervene appreciation on yen. Last week, Finance Minister Hirohisa Fujii said that he did not support a weak yen. Australia’s S&P/ASX 200 Index loses more than -1% while S. Korea’s KOSPI Index fell -0.8%.The MSCI Asia Pacific Index slides -1.7%.
Gold and other precious metals move sideways in Asia session. Although USD plunges against Japanese yen, it rebounds against other currencies. The greenback rises to 2-week high at 1.457 against euro and 0.86 against Australian dollar. Against British pound, the dollar surges to 1.579, a level not seen since May.
We have a light calendar today. Germany’s CPI probably contracted -0.2% mom in September after rising +0.2% a month ago. Subdued inflationary pressure may weigh on gold. Both ECB President Trichet and BOC Governor Carney will speak later today. We expect both of them will acknowledge recent positive development in the economy. However, recovery at current pace is not sufficient to call for an exit of easing monetary policies.
Commitments of Traders
- Crude Oil: Net speculative long positions jumped to 62216 contracts, the highest level since the first week of January 2009. After 3 consecutive weekly increases, we expect to see pullback in net long next week amid long liquidations as well as sharp fall in crude oil price
- Natural Gas: Net shorts dropped to 163.8K contracts as natural gas price rose during the week. Although gas price has risen strongly in contrast with others in the energy complex, we believe the strength is premature as inventory is approaching the record high level and there’s no concrete evidence in demand recovery
- Gold: Net speculative long positions rose for the 5th consecutive week and made a new record high at 236.7K last week. However, we saw the pace of increase has moderated and the stretched position has made gold price vulnerable for correction
- Silver: Similar to gold, net speculative long positions for silver rallied above 47K contracts. Our view that ‘silver’s outperformance among precious metals may cause a more serious price correction’ began to materialize as silver price has fallen more severely than gold in the current reversal
- Platinum: Net long positions soared to a new record level of 18.2K. Strong auto sales data in August also revived investors’ confidence on PGMs. However, renewed pessimism that September auto sales will get hammered after the ‘cash for clunkers’ program should weigh on the white metal
Source: Oil n Gold Report
