Natural gas trading outlook: futures trade lower ahead of US data on supplies

Natural gas futures traded lower during early hours in Europe due to expectations of sizable gains in inventories in the US. The government report, due later today, is set to reveal the milder weather last week made possible 99 billion cubic feet in gains. Weather reports for today forecast some impressively cold regions, and some extremely hot, though overall temperatures in the US will be near to above normal.

Front month natural gas futures, due in June, lost 0.34% at the New York Mercantile Exchange to trade for $4.352 per million British thermal units at 9:35 GMT. Prices ranged from $4.340 to $4.384 per mBtu. Yesterday the contract closed for a 0.21% gain, though earlier it reached the lowest level in a month at $4.4339 per mBtu. Over the last 10 days the blue fuel dropped 10.46% as the cold season in US draws to an end.

According to AccuWeather.com New York will be cloudy early today, before the clouds yield later on. Temperatures will range 63-70 degrees Fahrenheit. In the next couple of days the weather will be rainy, with some possibility of heavy thunderstorms and rains, though readings will remain relatively high for the season at 55-75 degrees. Chicago will be 15-20 degrees colder than usual today, with lows in the mid 30s and highs below 55. Temperatures will slightly rise over the next few days, but will remain below usual for the weekend, when the highs will be in the upper 50s, while the lows will settle in the mid 40s. Los Angeles is expected to break the 100 mark today, after reaching 99 yesterday. The extreme heat will weaken over the following days, with temperatures entering average range of upper 50s to mid 70s at the start of next week.

The Energy Information Administrations weekly report on natural gas stockpiles in the US is due later today. Expectations of a 99 billion cubic feet increase in inventories pressured the blue fuel. As the warmer summer season slowly edges over the remnants of cold over the US heating demand lowers and the blue fuel falls.

Extreme heat, however, could increase power demand, as air conditioners are put to work. More than 25% of the electrical power in the States is generated through natural gas, and the US consumes 21% of total natgas supply.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in June penetrates the first resistance level at $4.400 per million British thermal units, it will encounter next resistance at $4.434. If breached, upside movement will probably attempt to advance to $4.464 per mBtu.

If the energy source drops below its first resistance level at $4.336 per mBtu, it will see support at $4.306. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.272 per mBtu.