Natural gas trading outlook: futures gain on minor warm-up in the US for the next weeks

Natural gas made slight gains on Thursday as weather forecasts called for an insignificant rise in temperatures in the following weeks that should limit gains in US gas storage.

On the New York Mercantile Exchange, natural gas futures for settlement in May recorded a price of $4.539 per million British thermal units at 11:14 GMT, marking a gain of 0.20% for the day. Prices moved between $4.564 and $4.527 per mBtu. Todays gain comes after three-out-of-four days of losses, and currently the contract stands at a 1.8% decline for the week.

NatGasWeather.com reported that, as expected, Thursday started with chilly weather, but readings will rise steadily across the 48 lower states. A build-up of high-pressure will result in the rise of temperatures over the next days, with the notable exception of the North-central region, which will see entry of cold northern air on Saturday. The Northeast will also see limited warm-up, and heating demand there is expected to retain current levels.

After the weekend, more active weather is to follow, with cold blasts tracking in from Canada. According to NatGasWeather, though, after the warm-up in the next few days, there will be no significant rise in temperatures over the following weeks, suggesting slight-to-no gains for natural gas reserves build-up after the recent warm-up, lifting prices for front-month delivery.

Later today, the Energy Information Administration is due to release its weekly report on natural gas reserves as investors are keeping close watch for changes that would suggest a rise in demand. Expectations stand at a weekly gain of 34BN cubic feet in inventories, as the recent warm-up supposedly helped replenish stocks.

Last week the agency’s data signified a 4BN cubic feet rise in inventories during the week ended April 4th, though overall stocks are more than 50.7% lower from a year earlier and 54.7% beneath the 5-year average – the lowest in 11 years. Analysts had expected a gain of 15 billion cubic feet.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in May penetrates the first resistance level at $4.581 per million British thermal units, it will encounter next resistance at $4.632. If breached, upside movement will probably attempt to advance to $4.661 per mBtu.

If the energy source drops below its first resistance level at $4.501 per mBtu, it will see support at $4.472. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.421 per mBtu.