Natural gas trading outlook: futures rise on cold blast, EIA data eyed

Natural gas gained on Thursday as a fresh cold blast infiltrated the north-central US, but gains were capped as the rest of the US continued to enjoy mild weather while government data later today will likely register the first inventory build for the season.

Natural gas for delivery in May traded 0.62% higher at $2.757 per million British thermal units at 9:53 GMT, shifting in a daily range of $2.765-$2.740. The contract fell 2.5% yesterday to $2.740 per mBtu.

The Energy Information Administration is expected to report at 14:30 GMT that US natural gas stockpiles rose by around 20 bcf in the week ended March 20th as most of the US enjoyed seasonal and warmer weather last week, while a cold blast across the Northeast had a limited reach. The five-year average withdrawal is 19 billion cubic feet, while the year-ago storage drop was -56 bcf.

According to NatGasWeather.com, natural gas demand in the US will be moderate through April 1st, and locally high early this weekend, with a slightly warmer weather trend for the South over the next seven days, while the North turns cooler.

Temperatures will peak in the 50s and 60s over the East today but a fresh cold blast that is already spilling into the north-central US will reach the Southeast the coming days, including Texas. This will push readings to 10-20 degrees Fahrenheit below normal for most of the eastern half of the country over the next several days, inducing higher-than-usual heating demand.

The West will remain mostly warm and dry in the coming week, NatGasWeather.com said. Highs over California will reach into the 80s and spur early season cooling demand, while the Northwest is affected by cooler conditions with rain and snow.

There will be a brief cold break late next week over the Great Lakes and eastern US as readings moderate considerably, but fresh Canadian weather systems will be quick to revisit the northern US the following days with rain, snow and below-average temperatures. The countrys southern and central regions will be slightly warmer than usual during the first week of April, while the West is divided into a warmer lower half and a cooler Northwest.

Next weeks inventory report, due on April 2nd, may reflect a near-average or slightly thinner inventory decline as widespread seasonal and warmer weather persists, while the north-eastern US saw a cold break mid-week. The five-year average withdrawal for the week ending March 27th is -22 bcf, while gas in storage declined by 71 bcf a year ago. Inventories are unlikely to gain much ground on deficits over the next three supply reports as cold Canadian air lurks across the border.

The Energy Information Administration reported last Thursday that US natural gas stockpiles fell 45 billion cubic feet in the week ended March 13th, matching the five-year average drop but falling short of analysts’ median estimate of -48 bcf. Total gas held in US storage hubs amounted to 1.467 trillion cubic feet, 13.3% below the five-year average inventory level of 1.692 trillion and 52.8% above year-ago stockpiles at 960 trillion cubic feet.

Readings

According to AccuWeather.com, New York will see temperatures peak at 62 degrees today, 9 above normal, before easing to the mid 40s and low 50s for the rest of the month. Highs in Chicago on March 28-29th will range between 31 and 35 degrees, compared to the average 52, before rebounding to 59 degrees on April 1st.

Down South, Houston will see temperatures peak at 69-75 degrees on March 27-28th, compared to the usual 75, before firmly establishing in the 80s. Readings in Los Angeles will max out at 94 degrees through March 27th, compared to the average 71, and will ease to the upper 70s and lower 80s the following seven days.

Pivot points

According to Binary Tribune’s daily analysis, May natural gas futures’ central pivot point stands at $2.762. In case the contract penetrates the first resistance level at $2.791 per million British thermal units, it will encounter next resistance at $2.843.

If breached, upside movement may attempt to advance to $2.872 per mBtu. If the energy source drops below its S1 level at $2.710 per mBtu, it will next see support at $2.681. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $2.629 per mBtu.