Natural Gas – An Integrated Analysis Phone- (0731)4295950CONTENTS Introduction Use... Phone- (0731)4295950Intr... Phone- (0731)4295950Trans... Phone- (0731)4295950Natur... Phone- (0731)4295950U.S.... Phone- (0731)4295950Industrial Demand:Electric Generation Demand: ... Phone- (0731)4295950Natu... Phone- (0731)4295950Gene... Phone- (0731)42959... Phone- (0731)4295950 ... Phone- (0731)4295950 ... Phone- (0731)4295950Weekly Quote... Phone- (0731)4295950Weekly... Phone- (0731)42959... Phone- (0731)4295950Fibon... Phone- (...
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Natural gas an integrated analysis special report by capital height

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Published on: Mar 3, 2016
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Transcripts - Natural gas an integrated analysis special report by capital height

  • 1. Natural Gas – An Integrated Analysis
  • 2. Phone- (0731)4295950CONTENTS Introduction Uses of Natural Gas Natural Gas Demand Factors Affecting Short Term Demand Factors Affecting Long Term Demand Natural Gas Supply Meeting Natural Gas Demand Factors Affecting Supply of Natural Gas U.S. Natural Gas price forecast Technical View
  • 3. Phone- (0731)4295950IntroductionNatural Gas is one of the principle sources of energy for many of our day-to-day needsand activities. For hundreds of years, natural gas has been known as a very usefulsubstance. The Chinese discovered a very long time ago that the energy in natural gascould be harnessed, and used to heat water.In the early days of the natural gas industry, the gas was mainly used to lightstreetlamps, and the occasional house. However, with much improved distributionchannels and technological advancements, natural gas is being used in ways neverthought possible.There are so many different applications for this fossil fuel that it is hard to provide anexhaustive list of everything it is used for. And no doubt, new uses are being discoveredall the time.Uses of Natural GasPower Generation: Natural gas is a major source of electricity generation throughthe use of gas turbines and steam turbines. Most grid peaking power plants and someoff grid engine generators use natural gas. Natural gas burns more cleanly thanother Hydrocarbon fuels, such as oil and coal, and produces less carbon dioxide perunit of energy released.Domestic use: Natural gas dispensed from a simple stovetop can generate heat inexcess of 2000° (1093° making it powerful domestic cooking and heating fuel. In F C)much of the developed world it is supplied to homes via pipes where it is used for manypurposes. In the rural areas it is also used as CNG & LPG.
  • 4. Phone- (0731)4295950Transportation: CNG is a cleaner alternative to other automobile fuels such asgasoline (petrol) and diesel. The energy efficiency is generally equal to that of gasolineengines, but lower compared with modern d diesel engines.Fertilizers: Natural gas is a major feedstock for the production of ammonia, via theHaber process, for use in fertilizer production.Hydrogen: Natural gas can be used to produce hydrogen, with one common methodbeing the hydrogen reformer. Hydrogen has many applications: it is a primary feedstockfor the chemical industry, a hydrogenating agent, an important commodity for oilrefineries, and a fuel source in hydrogen vehicles.Other: Natural gas is also used in the manufacture of fabrics, glass, steel, plastics, glass,paint, and other products. Natural gas uses by sector Other 8% Commercial Industrial 14% 32% Residential 22% Electric generation 24%
  • 5. Phone- (0731)4295950Natural Gas DemandNatural gas is believed by many to be the most important energy source for the future.The abundance of natural gas, worldwide as well as domestically, coupled with itsenvironmental soundness and multiple applications across all sectors, means thatnatural gas will continue to play an increasingly important role in meeting demand forenergy. There are many reasons for the long term expected increase in natural gasdemand. As can be seen, demand for all types of energy, save nuclear and hydropower, is expected to increase over the next 20 years. This general upswing can beattributed to the expected general growth of the U.S. economy and population in thefuture.Factors Affecting Short Term DemandDemand for natural gas has traditionally been highly cyclical. It depends highly on thetime of year, and changes from season to season:-Weather: Natural gas demand typically peaks during the coldest months and tapersoff during the warmest months, with a slight increase during the summer to meet thedemands of electric generators.Fuel Switching: Supply and demand in the marketplace determines the short termprice for natural gas. However, this can work in reverse as well. The price of natural gascan, for certain consumers, affect its demand. For instance, during a period of extremelyhigh natural gas prices, many electric generators may switch from using natural gas tousing cheaper coal, thus decreasing the demand for natural gas.
  • 6. Phone- (0731)4295950U.S. Economy: The state of the U.S. economy in general can have a considerableeffect on the demand for natural gas in the short term, particularly for industrialconsumers. When the economy is expanding, output from industrial sectors is generallyincreasing at a similar rate. When the economy is in recession, output from industrialsectors drops. These fluctuations in industrial output accompanying economic upswingsand downturns affects the amount of natural gas needed by these industrial users.Factors Affecting Long Term DemandThe long term demand factors reflect the basic trends for natural gas use into the future.In order to analyze those factors that affect the long term demand for natural gas, it ismost beneficial to examine natural gas demand by sector.Residential and Commercial Demand:
  • 7. Phone- (0731)4295950Industrial Demand:Electric Generation Demand:
  • 8. Phone- (0731)4295950Natural Gas SupplyMaintaining an adequate supply of this critical resource is essential to preserving andimproving our quality of life. Inadequate supply at any one time leads to price increases,which signal to production companies the need to increase the supply of natural gas tothe market. Supplying natural gas in order to meet this demand, however, is dependenton a number of factors.These factors may be broken down into two segments: general barriers to increasingsupply, and those factors that affect the short term supply scenario.Short Term Supply BarriersIn a perfect world, price signals would be recognized and acted upon immediately, andthere would be little lag time between increased demand for natural gas, and anincrease in supplies reaching the market. However, in reality, this lag time does exist.There are several factors that affect this lag time and the short term availability ofnatural gas supply. They include: Availability of Skilled Workers Availability of Equipment Permitting and Well Development Weather and Delivery Disruptions
  • 9. Phone- (0731)4295950General Barriers to Increasing SupplyIn addition to the short-term impediments to increasing natural gas supply, there existother more general barriers to the increased supply of natural gas. These include:Onshore and Offshore Access: An estimated 59 percent of the U.S. undiscoverednatural gas resources is located on federal lands and offshore waters, however much ofthese resources are off-limits to exploration and production. Access to coastalresources remains an ongoing issue for natural gas: in the wake of the tragic DeepwaterHorizon accident and oil spill in spring 2010, the administration instituted a six- monthmoratorium on deepwater drilling leases in the Gulf of Mexico.Pipeline Infrastructure: The ability to transport natural gas from producing regionsto consumption regions also affects the availability of supplies to the marketplace. Theinterstate and intrastate pipeline infrastructure can only transport so much natural gas atany one time, and in essence provides a ceiling for the amount of natural gas that canreach the market.The Financial Environment: Exploring for and producing natural gas is a verycapital intensive endeavor. In fact, the National Petroleum Council estimated in 2007that production companies will have to invest $4.3 trillion in capital between 2005 and2030 in order to keep pace with demand growth. While efficient and transparentfinancial markets in the U.S. do offer options for raising capital effectively, the rate atwhich production companies may do so can serve as a limiting factor in the increasingavailability of supplies reaching the market.
  • 10. Phone- (0731)4295950 TECHNICAL VIEWNatural Gas CMP - $4.531 Target Price –$6.090Moving averages Moving Averages 20 Day 50 Day 100 Day 200 Day Daily $4.293 $4..403 $4.356 $4.283 Weekly $4.312 $4.163 $4.387 $5.784Fibonacci retracement levels SCRIPT 0.0% 23.6% 38.2% 50.0% 61.8% 100.0% 138.2 161.2Natural gas $6.086 $5.216 $4.650 $4.215 $3.780 $2.323 $0.8936 $0.0104Expansion levels SCRIPT 23.6% 38.2% 50% 61.8% 76.4% 100% 138.2% 161.8%Natural Gas $4.542 $4.890 $5.542 $5.977 $6.543 $7.435 $8.870 $9.740Weekly Pivot SCRIPT R4 R3 R2 R1 P S1 S2 S3 S4Natural Gas $5.526 $5.155 $4.784 $4.657 $4.413 $4.286 $4.042 $3.671 $3.300Monthly Pivot SCRIPT R4 R3 R2 R1 P S1 S2 S3 S4Natural Gas $5.819 $5.338 $4.857 $4.694 $4.376 $4.213 $3.895 $3.414 $2.933
  • 11. Phone- (0731)4295950 TECHNICAL SUMMARY Support/Resistance Levels Price Key Turning Points 8.197 Price Crosses 18-40 Day Moving Average14 Day RSI at 80% 5.496 5.031 Price Crosses 9-40 Day Moving Average 52 Week High 4.92513 Week High 4.91514 Day RSI at 70% 4.898 4.747 3-10 Day MACD Oscillator Stalls 4.586 38.2% Retracement from 13 Week HighCurrent Price 4.585 Current Price 4.506 14-3 Day Raw Stochastic at 80% 4.489 14 Day %k Stochastic Stalls 4.485 50% Retracement from 13 Week High/Low 4.484 Price Crosses 40 Day Moving Average 4.467 14-3 Day Raw Stochastic at 70% 4.434 38.2% Retracement from 4 Week High 4.431 Price Crosses 9 Day Moving Average 4.421 14 Day RSI at 50% 4.397 14 Day %d Stochastic Stalls 4.387 50% Retracement from 4 Week High/Low 14-3 Day Raw Stochastic at 50% 4.384 38.2% Retracement from 13 Week Low 4.364 Price Crosses 18 Day Moving Average 4.341 38.2% Retracement from 4 Week Low 4.320 Price Crosses 40 Day Moving Average Stalls 4.309 14-3 Day Raw Stochastic at 30% 4.286 Price Crosses 9 Day Moving
  • 12. Phone- (0731)4295950 Average Stalls 4.269 14-3 Day Raw Stochastic at 20% 4.255 38.2% Retracement from 52 Week High 4.218 3-10-16 Day MACD Moving Average Stalls4 Week Low 4.190 Price Crosses 18 Day Moving Average Stalls13 Week Low 4.055 4.048 50% Retracement from 52 Week High/Low 3.840 38.2% Retracement from 52 Week Low14 Day RSI at 30% 3.724 3.290 Price Crosses 9-18 Day Moving Average52 Week Low 3.17014 Day RSI at 20% 2.852Daily Quotes Period Moving Average Price Change Percent Change Avg Volume 5-Day 4.498 +0.217 +4.97% - 20-Day 4.363 +0.235 +5.40% - 50-Day 4.414 +0.335 +7.88% - 100-Day 4.270 +0.755 +19.71% - 200-Day 4.133 +0.920 +25.10% -Year to Date 4.283 +0.360 +8.52% - Period Raw Stochastic Stochastic %K Stochastic %D ATR 9-Day 100.00% 93.90% 84.33% 0.066 14-Day 100.00% 91.90% 78.74% 0.068 20-Day 100.00% 84.21% 64.46% 0.068 Period RSI Percent R Historic Vol. MACD Oscillator 9-Day 65.09% 0.00% 32.98% +0.151 14-Day 59.33% 0.00% 29.71% +0.173 20-Day 56.67% 0.00% 29.44% +0.192 50-Day 53.76% 38.37% 32.09% +0.141 100-Day 52.21% 27.97% 30.69% +0.285
  • 13. Phone- (0731)4295950Weekly Quotes Period Moving Average Price Change Percent Change Average Volume6-Week 4.372 -0.330 -6.71% -6-Month 4.234 -0.145 -3.07% - 1-Year 4.107 -0.110 -2.34% - 3-Year 4.545 -4.735 -50.80% - 5-Year 5.817 -2.620 -36.36% - Period Raw Stochastic Stochastic %K Stochastic %D Average True Range 9-Week 54.48% 45.40% 45.72% 0.23214-Week 61.63% 49.75% 49.62% 0.24120-Week 71.55% 61.27% 58.97% 0.252 Period Relative Strength Percent R Historic Volatility MACD Oscillator 9-Week 57.31% 45.52% 42.35% -0.043 14-Week 55.61% 38.37% 38.16% +0.036 20-Week 54.21% 28.45% 35.91% +0.135 50-Week 50.57% 18.91% 41.57% +0.350100-Week 49.39% 41.56% 82.35% +0.209Monthly Quotes Period Moving Average Price Change %Change Avg Volume6-Month 4.373 +0.150 +3.38% - 2-Year 4.236 +1.215 +36.05% - 5-Year 5.799 -4.665 -50.43% -10-Year 5.823 +1.275 +38.52% -20-Year 4.151 +3.245 +242.16% - Period Raw Stochastic Stochastic %K Stochastic %D ATR 9-Month 79.90% 72.10% 63.96% 0.71814-Month 70.57% 60.73% 53.47% 0.85020-Month 42.75% 47.27% 48.72% 0.978 Period Relative Strength Percent R Historic Volatility MACD Oscillator 9-Month 53.35% 20.10% 97.09% +0.162 14-Month 49.87% 29.43% 37.71% +0.260 20-Month 48.47% 57.25% 44.01% +0.136 50-Month 48.92% 76.53% 50.29% -1.101100-Month 49.84% 80.24% 62.25% -1.733
  • 14. Phone- (0731)4295950Weekly Chart Analysis hartAbove is the weekly chart of Natural gas. We have applied retracement of its fall fromhigh of $13.752 (July 2008) to its low of $2.334 (August 2009). Natural gas over thepast one and a half years has retraced back to its 23.6% retracement level and hasbeen in uptrend since then making higher top and higher bottoms. The overall weeklychart of natural gas is making a symmetrical triangle pattern and we expect anaggressive break out in the near term. Also, considering its correlation with U crude U.Soil, Crude has retraced more than 61.8% of its fall back in 2008 and is in uptrendmaking higher tops and higher bottoms. If we look at 14 Days RSI, it is at 53.86 which isaveragely bullish and in overall uptrend as well and supporting our expected break out expectto the level of 38.2%($6.670) which is way above our conservative target of $6.090 $6.090.
  • 15. Phone- (0731)4295950Monthly Chart - Fibonacci retracementIn the monthly chart of Natural gas above, we have applied Fibonacci retracement ofuptrend starting from September 2009 to January 2010. It has taken support of retracement 2009level of 23.6 % ($5.216) and then the level of 61.8% ($3.780) acted as a crucial support forthe past one and a half years. N . Now, it is trading in the range of 38.2 & 50% and this weekhas taken crucial support of retracement level 50 cial 50%.Given its overall trend, it has been in uptrend making higher tops and higher bottoms and is in asymmetrical trading range and we expect an aggressive break out from here that will unfoldprices to 23.6% ($5.220) and if breaks that resistance then can further rally to $6.090. nd $6.
  • 16. Phone- (0731)4295950Fibonacci ExpansionIn the monthly chart of Natural gas above, we have applied Fibonacci expansion ofuptrend starting from September 2009 to January 2010 to project our next levels. levelsNatural gas is moving in the range of 4.890 ral 4.890-3.671(0 - 38.2%) from 2010 and now )can have a potential upside break break-out, given its trend and symmetrical triangle ,pattern, it may now unfold to 61.8% level near our target price $6.090. level,
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