Natural gas futures weekly recap, December 29 – January 2

Natural gas rose on Friday, recovering from a steep drop during the previous session that pushed it to the lowest in more than two years, as weather forecasts called for colder-than-usual weather during the coming week.

On the New York Mercantile Exchange, natural gas for delivery in February rose 3.95% on Friday to settle the week 1% lower at $3.003 per million British thermal units. Prices ranged between a weekly high of $3.211 touched on Monday, and Fridays low of $2.805, the weakest level since September 2012. The energy source slid 32% in 2014, its first annual decline since 2011.

Prices sold off sharply on Wednesday to settle the day 6.6% lower after the Energy Information Administration reported the fifth consecutive below-average weekly withdrawal in US natural gas inventories. Stockpiles recorded a drop of 26 billion cubic feet, well below analysts expectations for a decline in the range of 35-40 bcf and the five-year average withdrawal of 114 bcf.

This brought inventories to 3.220 trillion cubic feet, narrowing the deficit to the five-year average storage of 3.301 trillion to 2.5% from 4.9% a week earlier, while the surplus to year-ago levels expanded to 7.8% from 4.8%.

NatGasWeather.com reported on Friday that mild weather will briefly push into the eastern US on January 2nd-3rd, but Arctic air will be tapped late Saturday and will infiltrate the northern US. The brutally cold air will reach the Northeasts high-demand states on Monday, driving strong heating demand. Below-freezing temperatures will also extend deeply to the South, bringing teen overnight lows to the high-demand state of Texas.

Very cold readings are expected to dominate the northern US through January 9-10th, NatGasWeather.com said, with temperatures across the central and eastern parts of the country projected to fall to 10-30 degrees Fahrenheit below normal. A brief warm-up is projected during the January 11-14th span, but another system carrying very cold readings will push into southern Canada shortly after, bearing the potential for frigid air to once again be tapped by weather systems tracking across the northern US.

Temperatures

According to AccuWeather.com, temperatures in New York tomorrow will range between 35 and 61 degrees Fahrenheit, above the average of 27-38, before plunging to as much as 18-22 degrees on January 8th. Chicago is set for a very cold Monday, with readings expected to range between 7 and 9 degrees, compared to the seasonal 19-32, and will remain colder than usual through January 10th.

Down South, Houston will remain slightly colder than normal over the next seven days, with readings set to range between 32 and 56 degrees on January 7th, before warming up to the mostly average 51-62 degrees on January 10th. On the West Coast, Los Angeles will enjoy seasonal weather tomorrow and will be warmer than usual through the following ten days, with readings set to peak at 78 degrees on January 6th, 10 above average.

Pivot points

According to Binary Tribune’s daily analysis for Monday, February natural gas futures’ central pivot point stands at $2.968. In case the contract penetrates the first resistance level at $3.131 per million British thermal units, it will encounter next resistance at $3.259. If breached, upside movement may attempt to advance to $3.422 per mBtu.

If the energy source drops below its first support level at $2.840 per mBtu, it will next see support at $2.677. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $2.549 per mBtu.

In weekly terms, the central pivot point is at $3.006. The three key resistance levels are as follows: R1 – $3.208, R2 – $3.412, R3 – $3.614. The three key support levels are: S1 – $2.802, S2 – $2.600, S3 – $2.396.