Natural gas trading outlook: futures drop some of Monday’s gains; cool forecast to persist

During early European trading natural gas reversed some gains it made yesterday, when storms and rains pushed readings in the central and eastern US down. The cooler weather is forecast to extend its stay to the next few days, backing higher heating demand outlooks. On the West Coast there is a completely different picture, with temperatures closing on historic highs, suggesting increased power demand, which also supports the blue fuel.

Natural gas futures due in June lost 0.56% at the new York Mercantile Exchange by 9:46 GMT, to trade for $4.772 per million British thermal units, prices ranging from $4.762 to $4.784 per mBtu. Mondays session closed for a 3.03% gain on cooler weather over the US, turning the losses since last Thursday around.

According to Natgasweather.com the strong storm, which caused deadly tornadoes over the central and southern US, will continue to generate heavy rains and thunderstorms. However, the commanding force for heating demand throughout most of the US for the next few days will be the advancing Canadian cold system. Midweek and through the weekend the system will keep readings below average for most of the Midwest and Northeast. While the central and eastern states are set for an extended period of cooler weather, lifting demand for heating, the Pacific coast will experience a serious heatwave, with both the northern and southern regions pushing record-high temperatures. The impressive heat will probably result in people turning air-conditioners on, elevating power demand, and supporting the blue fuel, which feeds power-stations.

Accuweather.com reported that today, April 29th, Chicago is set for an average day, temperatures between 48 and 68 degrees Fahrenheit. The next few days will see a sizable cooling, readings forecast to stand from 40 to 54. In New York it will be cold today and tomorrow, marking no higher than 53 degrees, 12 below the average high, and falling as low as 44. Beginning on Thursday, a warm-up is expected, that will normalize weather in the state over the second half of the week. On the West Coast the heatwave that started on Monday will persist through the week. Los Angeles is set for highs topping 90 degrees Fahrenheit for the next 5 days. The heat is pushing historic figures, and is recording temperatures 20 degrees higher than average. On the northern part of the coast, Seattle will also be heating-up, registering highs of over 75, or 15-20 degrees above the average, over the following days.

US stockpiles

Last 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, though expectations are that the next report will post moderate gains, if any.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in June penetrates the first resistance level at $4.857 per million British thermal units, it will encounter next resistance at $4.918. If breached, upside movement will probably attempt to advance to $5.024 per mBtu.

If the energy source drops below its first support level at $4.694 per mBtu, it will probably test $4.588. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.529 per mBtu.