Natural gas futures weekly recap, December 8 – December 12

Natural gas increased on Friday, after swinging between losses and gains through the week as forecasts of incoming colder weather and bearish EIA report provided mixed data to traders.

On the New York Mercantile Exchange, natural gas for delivery in January settled 4.43% higher on Friday at $3.795 per million British thermal units, but not before reaching its highest since December 3 at $3.826. On Thursday the energy source fell to $3.614. The contract dropped 0.18% during the week extending, but moderating last weeks’s losses of 7% through December 5 and 7.45% through November 28.

The Energy Information Administration reported on Thursday that US natural gas inventories slid by 51 billion cubic feet in the week ended December 5th, slightly above analysts’ projections ranging between 40 and 50 billion cubic feet. It was beneath last year’s decline of 186 bcf during the comparable period.

Total gas held in US storage hubs stood at 3.359 trillion cubic feet as of December 5th, narrowing its deficit to the five-year average of 3.710 trillion to 9.5% from 9.8% during the preceding seven days. Stockpiles were also 5.2% below the year-ago level of 3.545 trillion cubic feet.

The East Region saw a net withdrawal of 50 bcf to 1.780 trillion and was 9.7% below the five-year average, while inventories at the West Region declined by 8 bcf to 470 bcf and were 7.7% behind average levels. Stockpiles in the Producing Region rose by 7 bcf to 1.109 trillion, below the five-year average by 9.8%.

US Weather

NatGasWeather.com reported on Friday that the strong Pacific jet stream will maintain its presence over the western US, with heavy rain showers and snow. The weather system will flow through the Southwest and set up in Texas by Sunday, with even heavier rains and slightly colder temperatures.

Rain and snow showers are also expected over the the Northeast on Saturday, but much more rarely. The central and eastern US will enjoy above normal temperatures over the weekend, until the weather system from Texas moves into the region and combines with a colder blast of northern Canadian air, resulting in seasonal temperatures over the Great Lakes and the Northeast.

Moist Pacific weather systems will continue to travel through the US every other day. Those systems will be quite mild at first, pushing temperatures above the normal over the majority of the country, but the they will gradually trend colder after December 22.

Temperatures will slowly turn colder as Canadian air moves into the northern US, although it is still early to estimate exactly how cold it will be and how deep it will reach within US territory.

Temperatures

According to AccuWeather.com, temperatures in New York on December 8th will range between 35 and 46 degrees Fahrenheit, compared to the average of 32-43, with temperatures gradually moderating through the week ending December 21 to reach 41 degrees on SUnday. Chicago expects a rainy Monday afternoon, with readings projected to range between above-seasonal 37 and 47 degrees, before temperatures start decreasing as the week progresses down to 38 on December 21.

Down South, in Houston the week will start with temperatures higher than normal and reach 75 on Monday, however, readings are expected to hit 60 degrees by the end of the week. On the West Coast, the high in Los Angeles on December 15th will be 64 degrees, 3 below the average, with expectations readings to reach seasonal 67 on Friday and again to moderate to 64 during the weekend.

Pivot points

According to Binary Tribune’s daily analysis for Monday, January natural gas futures’ central pivot point stands at $3.755. In case the contract penetrates the first resistance level at $3.866 per million British thermal units, it will encounter next resistance at $3.937. If breached, upside movement may attempt to advance to 4.048 per mBtu.

If the energy source drops below its first support level at $3.684 per mBtu, it will next see support at $3.573. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.502 per mBtu.

In weekly terms, the central pivot point is at $3.735. The three key resistance levels are as follows: R1 – $3.885, R2 – $3.976, R3 – $4.126. The three key support levels are: S1 – $3.644, S2 – $3.494, S3 – $3.403.