Natural gas futures traded higher during midday trade in Europe today, after logging a sizable gain on Monday, with support from rising US temperatures. Weather reports project more heat for the US, which consume more than 20% of all natural gas. Previously, the energy source logged a big weekly gain on Friday, despite the most massive injection for stockpiles since 2008.
Front month natural gas futures, due in July, grew by 0.33% at the New York Mercantile Exchange to trade for $4.627 per million British thermal units at 12:12 GMT. Prices ranged from $4.593 to $4.640 per mBtu, nearing late-winter levels. Yesterday the blue fuel added 1.54%, after on Friday the contract logged a further 4.2% gain, as investors bet on an increase in power demand in the US.
Last Thursday, the US Energy Information Administration (EIA) revealed that natural gas supplies in the country had gained 114 billion cubic feet for the week ended May 23, exceeding expectations of a 110 bcf increase. The injection is the biggest weekly growth since June 2009, and is 21 bcf above the average gain for the week.
“We’ve had a pretty mild May and that’s raised hopes that these big storage injections will continue all summer,” said for Bloomberg Phil Flynn, senior market analyst at Price Futures Group in Chicago. “There’s growing optimism about the supply picture.”
Inventories, however, remain 40% below the 5-year average for the week, and need to recover more than 2.5 trillion cubic feet until November, when heating demand spikes natural gas consumption. In order to fully replenish the drained stockpiles, weekly injections would need to average 90 bcf through October, 20 billion above the average gains.
In the meantime, the hot summer months ahead should bump up natgas-fueled power demand, as air conditioners are put to work. The EIA, however, expects sustained high yields and gains for stockpiles, through booming shale gas extraction.
US weather report
According to AccuWeather.com, New York is set for quite a warm day, with temperatures ranging 66-84 degrees Fahrenheit, several above average. However, patterns project a high possibility of afternoon thunderstorms. Readings will remain relatively high through this week, with slight decrease on Thursday, before a sunny and pleasant weekend with temperature highs in the mid 80s. Next week will see a significant cooldown, which will bring temperatures to 10 below normal.
Boston will also be warmer than usual today, with plenty of sun and readings broadly between 60 and 75. Readings will be slightly lower than average for the next two days, with temperature highs in the mid 60s, several below average, before a warm up on Friday. The weekend will be sunny and pleasant, with temperatures 60 to 80, a few degrees more than usual.
Chicago is set for a mostly sunny, though breezy day, with temps no higher than 80 and no lower than 60, just above average. Tomorrow readings plummet by 10 degrees, alongside heavy rains and thunderstorms. However, the late workweek will be sunny and warm with temperatures just below normal.
Over on the West Coast, Los Angeles will have normal temperatures this week, with highs in the upper 70s and lows about 60, before a slight warm up for the weekend, with readings several above average. Up North, Seattle will be quite sunny today, temps between 50 and 70. The whole week is projected to be quite similar, with plenty of sun and readings a few above average.
Technical view
According to Binary Tribune’s daily analysis, in case natural gas for settlement in July penetrates the first resistance level at $4.647 per million British thermal units, it will encounter next resistance at $4.683. If breached, upside movement will probably attempt to advance to $4.745 per mBtu.
If the energy source drops below its first resistance level at $4.549 per mBtu, it will see support at $4.487. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.513 per mBtu.
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