Natural gas rose during Thursdays European trading session but hovered near the lowest level since November 2013 ahead of government data that may show a yet another larger-than-expected build in nationwide inventories.
On the New York Mercantile Exchange, natural gas for delivery in September added 0.40% by 11:49 GMT, to trade at $3.801 per million British thermal units. Prices ranged between a daily high of $3.817 and low at $3.780 per mBtu, not far off from Mondays 8-1/2-month low of $3.725. The power-plant fuel lost 0.99% on Wednesday to close the trading session $3.786 per mBtu.
Natural gas marked moderate daily gains on Thursday but downside moves are likely as the Energy Information Administration will probably report that US natural gas inventories rose by 93 billion cubic feet during the week ended July 25th. Moreover, mild weather this week is projected to have a significant impact on August 7ths reading which encompasses data for the seven days through August 1st. However, a gradual warm-up starting late this week and extending throughout August is expected to begin lifting prices as early as next week.
According to NatGasWeather.coms weather forecast for the July 31 – August 6 period, temperatures over most of the US will begin to edge higher starting next week, paving the way for a slightly warmer trend. Currently, readings in the countrys central and southern parts are below normal after an unseasonably cool air mass pushed deep into Texas and the Southeast, ensuring comfortable readings and lower-than-usual cooling demand. As we have reported in the previous days, the western and southernmost areas of the country remain warm to hot, inducing moderate-to-high local electricity demand to power air conditioning.
In the time span between August 7th and August 13th, NatGasWeather.com expects high pressure to set up over the eastern, southern and western parts of the country, with temperatures rising to between 90 and 100 degrees Fahrenheit. The Midwest and Northeast, however, will see a much milder warm-up as weather systems carrying cool air will likely track down from southern Canada and keep any temperature jumps in check. The remaining portion of the country will see warm weather driving seasonally high cooling demand, starting at moderate levels early next week.
Thus, inventory builds following the one reported on August 7th are expected to come leaner and closer to average levels, cushioning any drops and supporting prices to the upside.
Todays EIA report will likely fuel large volatility as numbers are expected to double the average gain. A Bloomberg survey predicts a 93-billion jump in US natural gas inventories for the week through July 25tt, in line with forecasts by market analysts at NatGasWeather.com for an increase between 90 and 94 billion cubic feet. The five-year average is 46 bcf. Since the end of the winter heating season, when supplies dropped to the lowest level in 11 years, above-average injections have replenished 1.397 trillion cubic feet of natural gas stockpiles through July 18th, the fastest refilling pace since 2001.
According to AccuWeather.com, the high in New York on August 2nd will be 75 degrees Fahrenheit, 9 below normal, before jumping to as much as 88 degrees on August 13th, exceeding the average of 83 degrees. Detroit will see readings peaking at 79 degrees on August 2nd, 3 beneath usual, and apart from several single days, temperatures will remain 3-4 degrees below average through the end of August.
To the South, the high in Texas City on August 2nd will match seasonal levels at 90 degrees, before jumping to as much as 95 degrees on August 18th, compared to the average of 90 degrees. On the West Coast, Sacramento will see temperatures peaking at 101 degrees on August 1st, 9 above usual, and will remain between 2 and 10 degrees above average levels through the end of August.
Technical view
According to Binary Tribune’s daily analysis, in case natural gas for settlement in September penetrates the first resistance level at $3.828 per million British thermal units, it will encounter next resistance at $3.869. If breached, upside movement will probably attempt to advance to $3.909 per mBtu.
If the energy source drops below its first resistance level at $3.747 per mBtu, it will see support at $3.707. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.666 per mBtu.
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