Natural gas futures weekly recap, November 17 – November 21

Natural gas shed almost 5% on Friday as retreating Arctic temperatures gave way to milder conditions for the central and eastern US during the weekend, significantly reducing heating demand. The energy source, however, still registered a sizable weekly gain as US gas stockpiles fell more than expected last week and additional cold blasts are waiting on the doorstep.

On the New York Mercantile Exchange, natural gas for delivery in December fell 4.97% on Friday to settle the week 6.5% higher at $4.266 per million British thermal units. The energy source rose to $4.489 on Thursday, the highest close since June 25th.

NatGasWeather.com said in its Friday weather report that national natural gas demand through November 27th will be moderate compared to normal, with a neutral to slightly-colder weather trend for the following seven days.

Arctic temperatures across the Midwest and Northeast began to fade on Friday, giving way to warmer-than-usual readings across the region during the weekend and significantly reducing heating demand. Highs over many southern and eastern regions were forecast to reach into the 60s and 70s through Sunday, including along the Northeast Coast.

However, warmer conditions will not last long, as a new colder system carrying rain and snow is expected to hit the north-central US early next week, pushing readings back below seasonal levels.

Moreover, a much more impressive system will arrive to the Northeast and Midwest around Thanksgiving Day, bringing additional snow and colder temperatures. It is expected to last through the following weekend, inducing very strong heating demand, and additional colder systems are likely to follow. Readings across the western US are expected to hold around seasonal, or at slightly cooler levels.

“The main focus is still on the cold blast for Thanksgiving Day and through the holiday weekend,” NatGasWeather.com analysts said in a Friday mid-day update. “The models are struggling on just how much cold air this system taps, but however it plays out, it will certainly be colder than normal over the Midwest and much of the East.”

Temperatures

According to AccuWeather.com, readings in New York on November 25th will range between 38 and 54 degrees Fahrenheit, compared to the average of 39-50, before sliding to 32-39 degrees on November 28th. The low in Boston will be 37 degrees on Tuesday, 2 above usual, before dropping to 26 degrees 3 days later. Chicago will see the mercury plunging to as much as 18 degrees on Thanksgiving Day, 11 below normal.

Down South, temperatures in Houston will range between 40 and 64 degrees on November 25th, beneath the average 51-69, before jumping to to 56-70 degrees on November 28th. On the West Coast, readings in Los Angeles will peak at 79 degrees on Tuesday, 9 above normal, and are expected to remain above-usual through the weekend.

Supplies

The Energy Information Administration reported on Thursday that US natural gas stockpiles fell by 17 billion cubic feet (bcf) in the seven days ended November 14th, the first withdrawal since March. This exceeded both analysts’ expectations for a decline of 6-12 billion cubic feet and the five-year average drop of 10 bcf.

Total gas held in US storage hub fell to 3.594 trillion cubic feet, widening the deficit to the five-year average of 3.838 trillion to 6.4% from 6.2% during the previous period. Last week’s inventory level was also 5.3% below the previous year’s 3.795 trillion during the comparable period.

Moreover, this week’s impressive Arctic blast is projected to have led to a significant draw for next week’s report, possibly exceeding the 100-bcf mark. The five-year average withdrawal for the week ending November 21st is 6 billion cubic feet.

About 49% of US households use gas for heating, data by the EIA shows. The government agency said in its monthly Short-Term Energy Outlook report on November 12 that gas production may jump 4.8% this year to the average of 73.79 bcf per day.

Pivot points

According to Binary Tribune’s daily analysis for Monday, December natural gas futures’ central pivot point stands at $4.344. In case the contract penetrates the first resistance level at $4.454 per million British thermal units, it will encounter next resistance at $4.643. If breached, upside movement may attempt to advance to $4.753 per mBtu.

If the energy source drops below its first support level at $4.155 per mBtu, it will next see support at $4.045. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.856 per mBtu.

In weekly terms, the central pivot point is at $4.304. The three key resistance levels are as follows: R1 – $4.494, R2 – $4.723, R3 – $4.913. The three key support levels are: S1 – $4.075, S2 – $3.885, S3 – $3.656.