Natural gas futures weekly recap, December 1 – December 5

Natural gas increased on Friday, but could not offset the previous four days of declines as forecasts predicted above normal temperatures over the majority of the US in addition to a bearish EIA report on Thursday.

On the New York Mercantile Exchange, natural gas for delivery in January settled 4.19% higher on Friday at $3.802 per million British thermal units. On Thursday the energy source fell to $3.638, its lowest since its lowest since October 28th. The contract dropped 7% during the week extending last weeks losses of 7.45%.

On Thursday natural gas slid to a new low as forecasts projected slightly warmer than usual temperatures over the majority of the US, with readings reaching highs of 60s and 70s across the southern half of the US. However, on Friday the bears turned tail and the energy source marked its first day of gains since last Monday, in spite of weaker-than-expected EIA report.

The Energy Information Administration reported on Thursday that US natural gas inventories slid by 22 billion cubic feet in the week ended November 28th, below analysts’ projections ranging between 30 and 50 billion cubic feet. It was also beneath the five-year average gain of 50 bcf and last year’s decline of 141 bcf during the comparable period.

Total gas held in US storage hubs stood at 3.410 trillion cubic feet as of November 28th, narrowing its deficit to the five-year average of 3.782 trillion to 9.8% from 10.4% during the preceding seven days. Stockpiles were also 6.2% below the year-ago level of 3.637 trillion cubic feet.

The East Region saw a net withdrawal of 34 bcf to 1.830 trillion and was 9.1% below the five-year average, while inventories at the West Region rose by 1 bcf to 478 bcf and were 8.4% behind average levels. Stockpiles in the Producing Region rose by 11 bcf to 1.102 trillion, trailing the average by 11.6%.

US weather

NatGasWeather.com reported on Friday that during the weekend the central and southern US will continue to enjoy above normal temperatures. High levels of snows and heavy rains are expected over the western US as a Pacific storm moves through the region, where despite the storm, temperatures will remain milder. Excluding the far northern US, temperature in the country will be slightly warmer than normal from Friday until next Monday.

Colder weather system are projected to move into the Midwest and Northeast by Tuesday, bringing temperature slightly below normal. Starting next weekend, moist Pacific weather systems will move though the country every few days, with areas of rain and snow, but overall warmer temperatures in the majority of the US.

Temperatures

According to AccuWeather.com, temperatures in New York on December 8th will range between 40 and 41 degrees Fahrenheit, compared to the average of 37-48, with temperatures ranging from 42 to 47 degrees through the week ending December 14. Chicago expects rainy and possibly snowy Monday, with readings projected to range between seasonal 28 and 39 degrees, before temperatures start increasing as the week progresses up to 47 on Sunday.

Down South, in Houston the week will start with temperatures slightly below normal, 63 on Monday and 61 and Tuesday, however, readings are expected to range from 67 to 71 through December 14. On the West Coast, the high in Los Angeles on December 8th will be 72 degrees, 4 above the average, before falling to seasonal 68-69 degrees through the weekend.

Pivot points

According to Binary Tribune’s daily analysis for Monday, January natural gas futures’ central pivot point stands at $3.763. In case the contract penetrates the first resistance level at $3.862 per million British thermal units, it will encounter next resistance at $3.923. If breached, upside movement may attempt to advance to $4.022 per mBtu.

If the energy source drops below its first support level at $3.702 per mBtu, it will next see support at $3.603. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.542 per mBtu.

In weekly terms, the central pivot point is at $3.827. The three key resistance levels are as follows: R1 – $4.016, R2 – $4.230, R3 – $4.419. The three key support levels are: S1 – $3.613, S2 – $3.424, S3 – $3.210.