Natural gas trading outlook: futures kept losing on Friday due to stockpiles, weather reports bullish

Natural gas continued to slide on Friday, keeping momentum after a bearish report on US storage levels on Thursday. Cooler weather expectations supported prices, as the next few days and weeks are predicted to register below-average temperatures for much of the US.

Natural gas futures due in June lost 1.38% at the new York Mercantile Exchange on Friday, to close for $4.658 per million British thermal units, registering a daily low of $4.644 per mBtu, the deepest trough in 10 days. The contract has lost 1.89% since the report on stockpiles in the US on Thursday.

Natgasweather.com reported that much of the central and north-eastern states will experience slightly cooler than normal weather in the next few days, before a cold system from Canada slowly moves in next week to halt readings at below-average for much of the central, eastern and some of the southern US. Meanwhile, the South will be warming-up for a day or two, before a storm tracks in from the West. Over the few next weeks expectations are the active weather will persist, with periods of cool blasts, including Spring storms, followed by warming in some regions. Overall, the following days will see cooler than average weather for much of the US, forecasting a higher demand for heating.

Accuweather.com predicts that New York will begin next week with a slightly colder Monday, temperatures ranging from 46 to 64 degrees Fahrenheit, 2-3 below average. Tuesday and Wednesday will see cloudy weather, preventing readings from topping 56-57 degrees. Elsewhere, Chicago is set for a cooler weekend and start of next week, temperatures between 41 and 52, several degrees below normal. Tuesday and Wednesday will be warmer, reaching average readings for this time of the year, before another period of cold beginning on Thursday. On the Pacific coast, Los Angeles will experience an impressive heat wave at the start of next week when temperatures will rise as high as 80 on Monday and 90 on Tuesday, 15 above average. The heat might induce increased power demand, as air-conditioners are put to work.

US natural gas stockpiles

On Thursday the Energy Information Administration released its weekly natural gas storage report for the week ended April 18th, which revealed a growth of 49 billion cubic feet in inventories, beating forecasts of a 44 bcf gain. It exceeded the previous week’s figure of a 24 bcf increase, bringing the volume of natural gas in storage to 899 bcf. Improving supplies push down on the blue fuel. However, even with last week’s gains the figure is still 52.9% below the 5-year average and prices remain at higher levels than before, after a significantly colder than usual winter in the US drained supplies of the heating fuel.

The previous report induced a major shift in the market, as natural gas rallied on better-than-expected demand. The government agency reported that US natural gas inventories rose by 24 billion cubic feet in the seven days through April 11th, compared to analysts’ forecasts for a 34-bcf jump, bumping prices 4.51%.

Technical view

According to Binary Tribune’s analysis for Monday, in case natural gas for settlement in June penetrates the first resistance level at $4.717 per million British thermal units, it will encounter next resistance at $4.777. If breached, upside movement will probably attempt to advance to $4.813 per mBtu.

If the energy source drops below its first support level at $4.621 per mBtu, it will probably test $4.585. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.525 per mBtu.