Natural gas traded near the lowest level in 11 months after the EIA reported on Thursday the 27th consecutive above-average weekly build in US stockpiles, while weather forecasts failed to give concrete evidence of early-November widespread freezes in the US.
Natural gas for delivery in November fell by 0.75% to $3.595 per million British thermal units by 10:01 GMT. Prices varied in a daily range between $3.654 and $3.589 per mBty, the lowest since November 20th. The contract slid yesterday for the third time this week, having fallen 1% to $3.622. Prices are down 4.6% so far this week.
The EIA reported that US natural gas stockpiles rose by 94 billion cubic feet (bcf) during the week ended October 17th, compared to analysts’ projections for a jump in the range of 95-98 bcf. The power-station fuel erased losses and jumped into positive daily territory after the release of the report. However, since the build was only an inch below expectations, the gain was unsustainable and the contract fell 1% through the close.
Total gas held in US storage amounted to 3.393 trillion cubic feet as of last week, narrowing the gap to the five-year average of 3.731 trillion to 9.1%. Year-on-year, gas levels were 9.0% lower.
The East region received a net injection of 47 billion cubic feet and stood at 1.872 trillion, 7.1% below the five-year average, while stockpiles in the West region rose by 8 bcf to 482 billion, trailing the five-year average by 6.9%. The Producing region saw a build of 39 billion cubic feet to 1.039 trillion and was 13.4% below the average.
The Energy Information Administration said in its Short-Term Energy Outlook dated October 7th that inventories may rise to 3.532 trillion cubic feet by the end of the month, the lowest for this time of the year in six years. Marketed gas production is expected to jump 5.4% this year to 73.98 bcf per day, the biggest percentage increase and also volume since 2011.
US weather
According to NatGasWeather.com, natural gas demand over the next seven days will remain low-moderate, compared to normal, with a neutral weather trend for the 8-14 day outlook.
The Northeast will see showers and slightly cooler-than-usual readings today as the previously reported slow moving weather system tracks across the region eastward.
The central and eastern US will enjoy above-seasonal temperatures this weekend before additional weather systems arrive next week. Readings over the central and southern US are also expected to be mild over the next several days, with highs into the 60s and 70s, and 80s for the South. Pacific storms across the Northwest will carry rains and slightly cooler-than-normal readings.
Late next week, a weather system tracking across the north-central US will push readings below average. A much colder Canadian weather system will follow between November 1st-3rd across the Midwest and Northeast, inducing modest heating demand. However, the uncertainty surrounding those active weather systems and forecasting agencies inability to clearly predict how much cold Canadian air will be tapped kept the market pressured at 11-month low levels.
“If enough northern Canadian air is tapped, a hard freeze will impact many cities with the potential for light snowfall around November 1st-3rd,” NatGasWeather.com analysts said in a note. “If not enough cold air makes it deep into the northern US, another much larger than normal builds will result.”
The central and southern parts of the country, however, will remain mild, curbing heating and cooling demand. The western US will be affected by Pacific weather systems.
Temperatures
According to AccuWeather.com, readings in New York on October 28th will peak at 70 degrees Fahrenheit, 10 above average, before falling to 53 degrees on November 2nd, 5 below usual. A following warm-up is expected to push highs to 68 degrees on November 4th-5th.
Readings in Detroit will range between 46 and 67 degrees on October 28th, above the average 39-55, before falling to as much as 36-49 four days later.
Down South, highs in Texas City will be 81-84 degrees through October 31st, compared to the average of 77-78, before dropping to seasonal levels at the start of November. On the West Coast, Los Angeles will see temperatures max out at around the seasonal 76-77 degrees through the first week of November, with a few exceptions of above-average readings at the end of October.
Pivot points
According to Binary Tribune’s daily analysis, November natural gas futures’ central pivot point stands at $3.632. In case the contract penetrates the first resistance level at $3.673 per million British thermal units, it will encounter next resistance $3.725. If breached, upside movement may attempt to advance to $3.766 per mBtu.
If the energy source falls below S1 at $3.580 per mBtu, it will next see support at $3.539. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.487 per mBtu.
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