Weekly Analysis and Recommendation:
Natural Gas took a big hit on Friday as traders reviewed inventory data released late on Wednesday. Natural gas is trading at 2.226. A drop in Japanese inventories contributed to a 0.5% decline in the broader economy. Albeit a positive signal to the commodities markets, an inventory decline is an alarming signal to the Japanese economy: the companies are losing confidence in their commercial performance and sales volumes as overseas risks linger.
Personal consumption was a bright spot for the Japanese economy, adding 0.3% to the GDP. Amidst the persistent disinflation and low commodity prices, Japanese households can afford more goods and services. The services sector is thus poised to expand while the industrial production might wither away as the Chinese slowdown and global headwinds are forcing Japanese manufacturers to decrease spending and output.
A cold winter could push natural gas prices higher. The next resistance for natural gas prices is seen at $3 per MMBtu. Prices hit this level back in April 2015. On the other hand, the current bearish momentum, added to record production and mild weather, could drag natural gas prices lower. Natural gas prices could see support at $2 per MMBtu. As a matter of fact, prices tested this mark in October 2015.
The EIA1 forecasts that natural gas prices could average around $2.69 per MMBtu in 2015 and $3 per MMBtu in 2016. Citigroup forecasts that US natural gas prices could average around $2.7 per MMBtu in 2015 and $3 per MMBtu in 2016. The natural gas chart suggests that prices could oscillate between $2 per MMBtu and $2.4 per MMBtu in the near term.
Economic Events: (GMT)
- Natural Gas Weekly Update
Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)
- Weekly Natural Gas Storage Report
Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)