Natural gas trading outlook: futures steady amid mostly seasonal US weather

Natural gas futures were little changed during early trade in Europe today. Weather patterns project some unsettled weather over parts of the US, offsetting slightly above-average temperatures in others.

Front month natural gas futures, due in August, dropped 0.09% at the New York Mercantile Exchange to trade for $4.405 per million British thermal units at 9:19 GMT today. Prices ranged from $4.433 to $4.401 per mBtu. The contract dropped about 3% last week, reaching a monthly low at $4.375 per mBtu on Friday.

Futures declined on Friday in spite of weather forecasters predicting seasonal or higher-than-seasonal reading across the US following EIA’s bearish natural gas storage report on Thursday. The government agency revealed a 110 Billion cubic feet (Bcf) jump in stocks during last week. A wide array of estimates were cast ahead of the report, ranging from 93 to 107 Bcf. NatGasWeather.com had predicted a 102-107 Bcf increase, while Tim Evans, an energy analyst at Citi Futures in New York, gave a 93 Bcf figure for Bloomberg.

Total gas held in underground storage hubs was still 27.4% lower than last year’s levels during the comparable period. However, the EIA has suggested gains will continue to be above-average, and that most likely inventories will be completely replenished ahead of winter heating season.

Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said for Bloomberg: “We continue to underestimate the market’s ability to get gas into the ground. It was a very large number and it was a bearish number.”

US weather report

NatGasWeather.com reported on Friday that the US will see high pressure building up over the Midwest and Northeast, allowing for rising temperatures, which will reach into the 90s. A cooler system is moving eastwards through the Rockies, but will hardly impact readings as high pressure over the northern Plains will dampen much of its potency. However, the system will probably push readings down a few degrees later next week. Overall cooling demand will probably remain moderate-to-high.

In the 8-14 day outlook, NatGasWeather.com projects a warmer trend for the US. The high pressure over the southern US will expand into the North, lifting temperatures after the cooler system passes by. The southern, western and central US will see triple-digit readings.

New York will see mostly seasonal weather today, according to AccuWeather.com. It will be sunny and temperatures will be normal for the time, ranging 70-83 degrees Fahrenheit. Readings will start climbing tomorrow to stand several degrees above average over the next few days, accompanied by storms and clouds later on. Chicago will probably have several thunderstorms today, with temperatures withing normal range at 69-80 degrees. Temps, however, will drop over the next few days, to stand some 15 degrees below average with highs in the lower 70s.

Down South, Houston will see sunny and warm weather this week. Throughout the following days temperatures will range mid-70s to mid-90s, a few degrees above usual. Over on the West Coast, will also have a sunny week, with little changing readings, which will range mid-60s to 80, usual for the season.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in August penetrates the first resistance level at $4.458 per million British thermal units, it will encounter next resistance at $4.508. If breached, upside movement will probably attempt to advance to $4.549 per mBtu.

If the energy source drops below its first resistance level at $4.367 per mBtu, it will see support at $4.326. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.276 per mBtu.