Natural gas futures were set for another weekly loss during early trading in Europe today. Yesterday the Energy Information Administration (EIA) weekly report revealed natgas stockpiles gained 106 billion cubic feet, exceeding expectations and recording the highest injection since last June. Weather reports project warmer weather over the US next week.
Front month natural gas futures, due in June, added 0.44% at the New York Mercantile Exchange to trade for $4.378 per million British thermal units at 9:21 GMT. Prices ranged from $4.358 to $4.382 per mBtu. Yesterday the blue fuel lost 2.54%, after a sizable gain in supplies was reported, nearing a two-month low at $4.349 per mBtu. Over the previous four sessions the contract has lost 1.17%.
According to AccuWeather.com, New York will be cloudy and might see rains and thunderstorms today and tomorrow. Temperatures will range 56-78 degrees Fahrenheit. Starting on Sunday readings will rise, reaching into the 80s at the start of next week, which is several degrees above average.
Boston will be quite cooler than normal today, with temperatures no higher than 58, 10 degrees below usual highs. Come Saturday the heavy clouds will give way to the Sun, and temperatures will rise up to the high 60s. Next week will probably be normal in terms of temperature, though there might be some heat both at the start and end.
Chicago is set for some cool, with readings ranging low 50s to mid 60s, slightly below average, before Sunday brings a sizable warm up, with highs into the upper 70s. Temperatures next week will follow suit, with readings a few degrees above normal.
Los Angeles will also be cooler up to Sunday, with some clouds and a possible thunderstorm. Temperatures will be no higher than 72-73 Fahrenheit, before next week readings rise up to reach the low 80s, several above average.
US inventories
Yesterday the EIA released the weekly report on natural gas storage levels in the US for the week through May 16. The report showed that blue fuel supplies had added 106 billion cubic feet (bcf), exceeding expectations of 100-103 bcf growth. The figure records the biggest weekly gain since June 2013, and is 16 bcf above the 5-year average increase for the week.
However, stocks still need to recover more than 2.5 trillion cubic feet in order to restore pre-winter levels before November. This equals an average of more than 100 bcf gains each week till then, and as summer season sets in such growth might be hard to achieve.
Shale gas production is peaking, but power demand will be inevitably growing, as air conditioners are put to work for the hot summer months ahead.
Elsewhere, Russia and China signed a major gas contract on Wednesday. The deal is for the delivery of over 35 trillion cubic feet of gas to China over 30 years, starting 2018.
The deal will probably only slightly affect short-to-mid term gas prices, as the pipelines are planned to begin pumping in more than three years. “The whole tenet of the deal has a symbolic value,” said for the BBC Rain Newton-Smith, head of emerging markets at Oxford Economics. “It says that the two countries are prepared to work with one another.”
Technical view
According to Binary Tribune’s daily analysis, in case natural gas for settlement in June on the NYMEX penetrates the first resistance level at $4.466 per million British thermal units, it will encounter next resistance at $4.574. If breached, upside movement will probably attempt to advance to $4.632 per mBtu.
If the energy source drops below its first resistance level at $4.300 per mBtu, it will see support at $4.242. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.134 per mBtu.
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