Natural gas trading outlook: futures extend gains after best weekly performance since February

Natural gas continued its rise and reached a new high as forecasts warned about sub-freezing temperatures in the north-central US and colder-than-normal weather across the majority of the country.

On the New York Mercantile Exchange, natural gas for delivery in December gained 2.38% to $4.517 per million British thermal units by 9:22 GMT. Prices ranged between $4.471 and $4.544, the highest since end-June. The contract edged up 0.18% on Friday to $4.412 per mBtu, marking a one-week increase of almost 14%, its biggest weekly gain since February.

According to NatGasWeather.com, natural gas demand in the US over the next seven days will be high, compared to normal, with a colder weather trend for the November 17-23 time span.

Early this week a strong arctic blast will flow into the north-central U.S., bringing sub-freezing temperatures and pushing into northern Texas amid weather systems moving out of the Plains and into the Midwest.

Snowfalls are expected to form along the cold front and the slopes of the Rockies. During the next several nights temperatures will fall to single digit numbers and may even drop below the zero line within the core of the arctic blast affecting the northern Plains and Rockies.

Most of the eastern U.S. will enjoy mild weather before the cold front arrives Wednesday into Thursday. With the exception of the southwestern US, colder temperatures will reign over the rest of the country by the end of the week, NatGasWeather.com reported.

Early next week cold Canadian air will sweep across the northern U.S. accompanied by snowfall and much-colder-than-normal temperatures. The southern U.S. will also be affected by temperatures lower than usual, as cold blasts push deeper into the U.S.

The Southwest and California will enjoy above-seasonal readings, making them the only two regions which will not be within the cold weathers grasp.

Temperatures

According to AccuWeather.com, readings in New York on November 15th will range between 35 and 44 degrees Fahrenheit, below the average of 42-54, before dropping to 30-39 degrees three days later. Chicago will slide to 33 degrees on November 13th, 17 below usual, and will range between 20-31 degrees on November 18th.

Down South, temperatures in Houston will max out at 75 degrees on November 11th, 1 above normal, before falling to 64 degrees on November 16th. On the West Coast, the high in Los Angeles on November 12th will be 70 degrees, 4 below than normal, before increasing to as much as 76-77 degrees on November 15-16.

Supplies

The Energy Information Administration reported on Thursday that US natural gas stockpiles rose by 91 billion cubic feet in the week through October 31st, exceeding analysts’ projections for a jump of 85-87 bcf. This was the 29th straight above-average weekly build, sharply exceeding the five-year average gain of 42 billion cubic feet and last year’s gain of 35 bcf during the comparable week.

Total gas held in US storage stood at 3.571 trillion cubic feet, narrowing its deficit to the five-year average of 3.832 trillion by 1.4% to 6.8% from a week earlier. Gas stockpiles were 6.2% below year-ago levels.

This weeks build is expected to probably be the last for the year that would provide a gain on deficits, with an early estimate of 30-40 Bcf.

Pivot Points

According to Binary Tribune’s daily analysis, December natural gas futures’ central pivot point stands at $4.396. In case the contract penetrates the first resistance level at $4.510 per million British thermal units, it will encounter next resistance at $4.608. If breached, upside movement may attempt to advance to $4.722 per mBtu.

If the energy source drops below its first support level at $4.298 per mBtu, it will next see support at $4.184. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.086 per mBtu.