Natural gas futures were lower during midday trade in Europe today. The blue fuel is orbiting pre-winter prices, extending the downward trend, as cool Canadian blasts continue tracking southwards into the US, bringing temps down and allowing for big natgas stocks gains.
Front month natural gas futures, due in August, traded for $3.803 per million British thermal units (mBtu) at 12:15 GMT in New York today. Prices shifted between an eight-month low of $3.797 and $3.866 per mBtu. The contract dropped 2.58% on Monday, following a 4.7% loss for last week.
“We’re seeing some cool weather on the East Coast in the 10-day forecasts,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said for Bloomberg. “We’ve had some pretty big storage numbers that have been leaning on prices.”
Natural gas in storage increased by 107 Billion cubic feet (Bcf) in the week through July 11, the US Energy Information Administration (EIA) reported last Thursday. The build up exceeded expectations, pressuring the blue fuel. Mild weather forecasts applied more pressure on Monday, pushing futures to a seven-month low.
NatGasWeather.com suggested an injection of about 90 Bcf will be reported this week as well, which would be a massive ~40 Bcf above the 5-year average gain for the week. Equally large margins are projected for the following week as well.
US weather outlook
“Weather models are now indicating that it will be cooler than normal throughout for the rest of July and first half of August, a time when we usually see the largest amount of cooling demand,” Aaron Calder, analyst at Gelber & Associates in Houston, said in a note to clients today, cited by Bloomberg. “The market is worried that the summer will never come.”
NatGasWeather.com reported today that the northern US are seeing high pressure setting in, allowing for rising temperatures. However, a succession of cool Canadian blasts will be pushing into the US by Wednesday. The initial wave will not be quite impressive, but the following blasts will bring showers, rains and thunderstorms, and will push temperatures below normal for most of the US Northeast. The southern and western US will remain within an area of high pressure, keeping readings relatively high, apart from the Southeast, which will be briefly subject to a cooler system tracking through the Atlantic. Cooling demand over the next seven days will probably be moderate.
In the 8-14 day outlook, NatGasWeather.com projects a neutral trend for the US, with the Midwest and Northeast experiencing several degrees of cooling, with the cool blasts entering from Canada. The western and southern states will see little weather excitement, with high pressure dominating the outlook, keeping temps high.
New York will see quite sunny and warmer-than-average weather today, with temperatures ranging 72 – 86 degrees Fahrenheit, a few above usual. It will be mostly sunny throughout the whole week, though temps will be lowering starting Thursday. Chicago will be quite warmer than normal today, with readings at 64-90 degrees, several degrees above average. Temperatures will drop some 10-15 degrees tomorrow, though it will still be mostly sunny and pleasant. Temps will begin to slowly climb for the rest of the week, though they will remain below average.
Down south, Houston will also be warmer than normal today, with readings between 76 and 96 degrees, a few above average. It will be mostly cloudy and some thunderstorms are bound for the area for the following few days, before a sunny and even warmer weekend. Over on the West Coast, Los Angeles will see seasonal weather today, with readings at 66-84 degrees. Temps will be slowly climbing through to next week, with mostly sunny weather.
Technical view
According to Binary Tribune’s daily analysis, in case natural gas for settlement in August penetrates the first resistance level at $3.886 per million British thermal units, it will encounter next resistance at $3.922. If breached, upside movement will probably attempt to advance to $3.952 per mBtu.
If the energy source drops below its first resistance level at $3.820 per mBtu, it will see support at $3.790. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.754 per mBtu.
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