Natural gas trading outlook: futures edge up as cold weather persists

Natural gas edged up on Monday to extend gains to a fourth session as forecasting agencies projected stronger cold blasts arriving this week and lower temperatures over the majority of the central and eastern US regions.

Natural gas for delivery in April traded 2.15% higher at $3.036 per million British thermal units at 9:01 GMT, holding within a daily range of $3.045-$2.973. The contract jumped 3.37% on Friday and closed at $2.972.

The Energy Information Administration data issued on Thursday showed that US natural gas inventories fell by 111 billion cubic feet in the week ended February 13th, compared to analysts’ projections for a drop in the range of 105-111 bcf and the five-year average decline of 180 bcf. Stockpiles slid by 247 bcf during the comparable period a year earlier.

Total gas held in US storage hubs amounted to 2.157 trillion cubic feet, forming a surplus of 2.8% to the five-year average of 2.099 trillion from last week’s deficit of 0.5%. The surplus over the year-ago inventory level of 1.479 trillion cubic feet expanded to 45.8% from 31.4% a week earlier.

The five-year-average surplus, however, is not expected to last long as last week’s widespread cold blasts across the northern, eastern and parts of the central US are factored in. This week’s report is expected to show an inventory decline well above the normal, probably over -200 bcf. The five-year average drop for the seven days ended February 20th is 131 billion cubic feet, while stockpiles fell by 117 bcf a year earlier.

According to NatGasWeather.com, natural gas demand in the US will be very high compared to normal through February 28th.

The central and eastern US will be hit by another strong polar blast this week, which will push further compared to the last one and reach the southern Plains and Texas, bringing temperatures below the zero mark. Light to moderate ice and snow accumulations are expected over the southern US during the next few days, while temperatures are projected to reach overnight lows close or below zero in the core of the coldest air over the Midwest and Northeast.

The cold blasts are expected to take a breather on Wednesday before they return even stronger in the following two days, NatGasWeather.com reported. Temperatures are expected to range between 15-30 degrees over the majority of the central and eastern US regions, triggering higher-than-expected heating demand.

Meanwhile, the western US is expected to be periodically hit by lower temperatures as weather systems bring areas of rain and snow.

Over the next week weather systems are projected to continue their movement across the US with areas of rain, snow and cold temperatures. Readings over the northern, central, and eastern US will be slightly below normal, while the western US enjoys normal temperatures.

Readings

According to AccuWeather.com, the mercury in New York on February 23rd will range between 6 and 21 degrees Fahrenheit, compared to the average 30 and 43, and temperatures are expected to land between 14 and 26 degrees on Friday. Chicago will range between 7 and 29 degrees on February 24th, compared to the average of 24-39, and will see readings plunge as low as 3 degrees on 26th.

Down South, Houston will range between 42 and 46 degrees tomorrow, compared to the average 50-68, with readings slowly climbing to 62 degrees on 28th. On the West Coast, Los Angeles will enjoy mostly seasonal weather throughout February, with readings set to range on February 23rd between 47 and 64 degrees, compared to the average 50-69.

Pivot Points

According to Binary Tribune’s daily analysis, April natural gas futures’ central pivot point stands at $2.939. In case the contract penetrates the first resistance level at $3.040 per million British thermal units, it will encounter next resistance at $3.107. If breached, upside movement may attempt to advance to $3.208 per mBtu.

If the energy source drops below its first support level at $2.872 per mBtu, it will next see support at $2.771. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $2.704 per mBtu.

In weekly terms, the central pivot point is at $2.897. The three key resistance levels are as follows: R1 – $3.082, R2 – $3.191, R3 – $3.376. The three key support levels are: S1 – $2.788, S2 – $2.603, S3 – $2.494.