Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Natural Gas Unseasonal Price Rise. Why is it Rising?

Commodities / Natural Gas Mar 05, 2008 - 12:59 AM GMT

By: Donald_W_Dony

Commodities Best Financial Markets Analysis ArticleSomething is happening to natural gas that should occur at this time of the year; it is rising. This commodity normally starts to strengthen early in the 4th quarter or, to a lesser degree, advance during the summer months. But rallying in between these higher demand periods is certainly unique, and more importantly, breaking through the solid price resistance level of $9.00 is very unexpected. So, what is driving this natural source higher?


There are a couple elements colliding together that is pushing natural gas higher than it normally should at this time of the year.

The weather, of course, is a key factor. Throughout most of the eastern portion of North America, winter has held that part of the country in a long icing grip. Snow storms continue to batter much of the central and east of Canada and the U.S. as spring approaches.

Storage levels are another issue. They are getting a lower than the market would like. Withdrawals from natural gas in storage have been a lot larger than the expectations over the last several weeks.

The other key driver is imports. Almost 18% of natural gas that goes to the U.S. is met through gas imports. Some of this comes from Canada and the rest is from liquid natural gas (LNG). Recent data indicates that many new LNG projects have been delayed and that LNG imports are on the decline. Canada, which provides a good deal of the U.S. gas imports, has slashed rig rates due to the low natural gas prices in Alberta, while Canadian demand is rising. Mexican natural gas demand is also growing very strongly, while Mexican supply growth has slowed steadily. Overall, net supply is decreasing at a fast rate then expected.

However, one of the biggest problems for the gas industry has been the low prices. After soaring to a December 2005 high of over $15 US per mcf, prices fell below $5.00 US in the summer of 2006 and below $6.00 US in the summer of 2007.

The good news is that U.S. natural gas storage levels have fallen below 2007 year levels. Canadian natural gas production in January has also fallen considerably. Plus, with the gas industry's recent cuts in capital expenditures due to low prices, drilling activity has had a major downturn. This also impacts the new supply.

Technical models are indicating a positive turn for natural gas, especially now that the commodity has crossed the $9.00 resistance zone. Models are suggesting that $9.00 will now be the support line on any price pullbacks and a target of $12 can be anticipated for 2008.

Bottom line: Natural gas is advancing into a price range that the commodity has not seen since mid-2005. With weaker supply and steady building demand, gas prices can be expected to remain strong moving into the summer. Also, with the hurricane season only several months away, any disruption in the already soft supply , can send natural gas easily above $12.

Investment approach: Many natural gas stocks have already moved to 52 week highs but are expected to continue climbing in 2008. The strongest period for gas prices still remains in the 4th quarter. There are also new natural gas ETFs that track the commodity.

More research is in the March issue of the Technical Speculator.

Your comments are alway welcomed.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2008 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

Donald W. Dony Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife