Natural gas futures weekly recap, June 16 – June 20

Natural gas fell for a third straight day on Friday and settled the week over 4% lower after the Energy Information Administration reported a larger-than-expected gain in US natural gas inventories, while weather forecasts showed cooling conditions across some parts of the country.

On the New York Mercantile Exchange, natural gas futures for settlement in July fell by 1.16% on Friday to close the session at $4.531 per million British thermal units. Prices shifted between a one-week low of $4.516 and $4.614 per mBtu. The energy source slid in four out of five days this week, closing the five-day period 4.5% lower.

Natural gas extended its weekly decline on Thursday after the Energy Information Administration reported a larger-than-projected build in US natural gas inventories during the week ended June 13th. The log revealed a gain of 113 billion cubic feet, while analysts at NatGasWeather.com had suggested a 105-110 Bcf injection. The 5-year average gain for the week is 85 Bcf. Inventory levels remain 29.1% below last year’s readings for the same week.

However, movement to the downside is expected to be limited as the US enters the summer season when high temperatures spur electricity demand to power air conditioning, with power stations accounting for 30% of US natural gas consumption.

NatGasWeather.com reported on Friday that overall cooling demand will be moderate-to-high over the next seven days, with an upward trend. A cool weather system tracks out of the Rockies and will push into the Midwest and Northeast over the weekend, bringing some cool weather. Another cooler system will push into the central US from Canada halfway through next week, probably bringing temperatures down a few degrees. The western US will see mostly seasonal weather, with rising temps over the weekend. In the South, high pressure will remain strong and lead to very warm, but seasonable temperatures, which will continue to drive moderate to strong cooling demand for weeks to come

In the 8-14 day outlook, NatGasWeather.com projects a warmer trend, with areas in the Northeast and Midwest somewhat cooler and rainy, while the South will be quite hot, bumping up air cooling. Readings will probably be climbing everywhere in early July.

Moreover, next weeks supply data is expected to show a smaller build due to this weeks high temperatures. There will be an attempt by a weather system to weaken the ridge over the northern US around June 29th but the eastern and southern US should remain quite warm and drive moderate to strong cooling demand. This next weather system very well could run into the stubborn ridge and get deflected over the top and back into Canada with limited impacts. Thereafter, the heat should expand and push into a good portion of the northern US, NatGasWeather.com said.

According to AccuWeather.com, the high in New York on June 26th will be 85 degrees Fahrenheit, 3 above the usual, before surging to 10 above normal at 93 degrees on July 1st. In Chicago, temperatures will peak at 76 degrees on June 26th, compared to the average of 83, but will soar to 92 degrees four days later, exceeding usual readings by 8 degrees. Texas will see seasonal weather throughout next week with a high and a low of 89 and 78-79 degrees Fahrenheit respectively on Thursday. On the West Coast, Los Angeles will also enjoy mostly seasonal or little below seasonal weather, with highs of 76-78 degrees, which however will track up to as much as 86 degrees on July 1st, exceeding the average of 82 degrees.

Technical view

According to Binary Tribune’s daily analysis for Monday, in case natural gas for settlement in July penetrates the first resistance level at $4.591 per million British thermal units, it will encounter next resistance at $4.652. If breached, upside movement will probably attempt to advance to $4.689 per mBtu.

If the energy source drops below its first resistance level at $4.493 per mBtu, it will see support at $4.456. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.395 per mBtu.