Natural gas futures weekly recap, May 12 – May 16

Natural gas fell on Friday as investors locked in profits ahead of the weekend after two sessions of gains and as weather forecasting agencies predicted overall seasonal temperatures across most of the US, curbing demand prospects for the power-station fuel.

On the New York Mercantile Exchange, natural gas futures for settlement in June slid 1.25% on Friday to $4.413 per million British thermal units, having shifted in a daily range between $4.407 and $4.458 per mBtu. The energy source rebounded from a 1-1/2-month low of $4.289 on Thursday, settling the day 2.3% higher, but nevertheless closed the week 2.5% lower.

US natural gas stockpiles added 105 billion cubic feet in the week ended May 9th, government data showed on Thursday, which was the highest injection in almost a year. Analysts had expected a build up of around 100 billion cubic feet. However, inventories remained at the lowest level for that period since 2003 at a trillion cubic feet below the 5-year average and around 800 billion bcf below last years level.

This fueled a solid jump in prices on Thursday but gains were partially offset on Friday. Investors locked in profits and exited positions ahead of the weekend, with weather forecasts calling for overall normal temperatures across most of the US in the short term, limiting electricity demand to power air-conditioning. As reported by Bloomberg, mostly seasonal readings are to be expected on the East Coast between May 21st and May 25th.

According to AccuWeather.com, the weather in New York on May 23rd will be mostly cloudy, coupled with showers, and temperatures will vary between days high of 68 degrees Fahrenheit, 5 below usual, and a low of 56 degrees Fahrenheit, matching the average. A gradual warm up and sunny weather is to be expected several days later, with readings expected to jump to 78 degrees Fahrenheit on May 26th, 4 degrees above seasonal.

Chicago will see mostly sunny weather and temperatures in the range of 56 to 75 degrees Fahrenheit on May 21st, around 2-3 degrees above the average, but the pattern will switch by May 26th to cloudy with rains and thunderstorms, bringing readings down to 1-3 degrees below seasonal. Meanwhile on the West Coast, Los Angeles will see mostly sunny weather throughout next week with temperatures peaking at 75 degrees on Wednesday, matching the average, before warming up to as much as 82 degrees on May 26th, 7 degrees above the normal.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in June penetrates the first resistance level at $4.445 per million British thermal units on Monday, it will encounter next resistance at $4.477. If breached, upside movement will probably attempt to advance to $4.496 per mBtu.

If the energy source drops below its first resistance level at $4.394 per mBtu, it will see support at $4.375. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.343 per mBtu.