Natural gas trading outlook: futures set for biggest weekly advance since February

Natural gas was set for a sizable weekly gain following a new high four-month high on Thursday amid expectations of cold weather over the Midwest and interior Northeast that will drive higher heating demand.

On the New York Mercantile Exchange, natural gas for delivery in December fell 0.30% to $4.391 per million British thermal units by 9:05 GMT. Prices ranged between $4.436 and $4.387. The contract edged up 5.01% on Thursday to $4.404 per mBtu, having earlier reached $4.457, the highest since early-July. Prices are up 12.8% so far this week, headed for the biggest weekly gain since the week ended February 21st.

According to NatGasWeather.com, natural gas demand in the US over the next seven days will become high, compared to normal, with a slightly colder weather trend for the November 14-20 time span.

The Northeast will see today the first of series of weather systems track out and leave behind rains or snow. By Saturday morning light snowfall accumulations are expected to form over portions of the Great Lakes and New England.

During the weekend a second wave of moisture-starved weather system will hit the Midwest and interior Northeast. The third wave, accompanied by arctic air, will flow over the north-central US early next week.

Sub-freezing temperatures will begin their reign over the central and eastern US through Wednesday, NatGasWeather.com said. The cold will persist in the region for several days. In the West, high pressure will continue its dominance and provide above-normal temperatures, including coastal southern California.

Late next week an arctic blast over the northern US will bring below-normal temperatures, followed by milder but chilly weather systems. Next weekend the southern US will experience colder weather, but will warm up as the new week begins. The western US will remain mainly warm and dry as high pressure dominates.

Temperatures

According to AccuWeather.com, readings in New York on November 13th will range between 36 and 49 degrees Fahrenheit, above the average of 42-55, before dropping to 31-44 degrees three days later. Chicago will slide to 30 degrees on November 12th, 13 below usual, and will range between 41-49 degrees on November 17th.

Down South, temperatures in Houston will max out at 78 degrees on November 10th, 4 above normal, before falling to 60 degrees on November 15th. On the West Coast, the high in Los Angeles on November 8th will be 88 degrees, 13 higher than normal, before dropping to as much as 76-77 degrees on November 14-15.

Supplies

The Energy Information Administration reported on Thursday that US natural gas stockpiles rose by 91 billion cubic feet in the week through October 31st, exceeding analysts’ projections for a jump of 85-87 bcf. This was the 29th straight above-average weekly build, sharply exceeding the five-year average gain of 42 billion cubic feet and last year’s gain of 35 bcf during the comparable week.

The market initially reacted by falling little over 1% on a daily basis shortly after the release of the report, but cold weather forecasts kept prices underpinned and propelled them to settle the day 5% higher.

Total gas held in US storage stood at 3.571 trillion cubic feet, narrowing its deficit to the five-year average of 3.832 trillion by 1.4% to 6.8% from a week earlier. Gas stockpiles were 6.2% below year-ago levels.

Pivot Points

According to Binary Tribune’s daily analysis, December natural gas futures’ central pivot point stands at $4.327. In case the contract penetrates the first resistance level at $4.534 per million British thermal units, it will encounter next resistance at $4.665. If breached, upside movement may attempt to advance to $4.872 per mBtu.

If the energy source drops below its first support level at $4.196 per mBtu, it will next see support at $3.989. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.858 per mBtu.