Natural gas futures remained steady during European trading on Wednesday, as cooler weather over the US supported last session’s increase. Weather reports indicate more warm-ups and cool-downs as the month comes to a close.
On the New York Mercantile Exchange natural gas futures due in June traded at $4.756 per million British thermal units at 9:10 GMT, falling 0.04% from the previous session’s close, with daily prices ranging from $4.777 to $4.745 per mBtu. Yesterday, gains of 0.91% nullified Monday’s 0.82% loss, though the market is still in the grip of Thursday’s 4.51% jump, in light of US inventories.
NatGasWeather.com reported that April 23rd began with cool weather over the Great Lakes and the Northeast, with forecasts depicting a colder-than-average weather through the weekend. Meanwhile, the southern US and the Plains will warm-up, though any gains in heating fuel inventories might be reversed by a following low-pressure system, which will bring a spring storm over much of the central and eastern US and will keep lower temperatures for some time to come. Elsewhere, the Pacific front will also see a period of colder-than-normal weather, as storms track in from the ocean. Overall, readings today and tomorrow will be slightly lower than average, boosting bullish natural gas sentiment.
According to AccuWeather.com, in New York temperatures may fall to 40 degrees Fahrenheit on April 23rd – 7 below average, while tomorrow will see a slight warm-up, with readings dropping no lower than 45, but still below the normal for this time of year. Elsewhere, Chicago is set to see pretty normal temperatures today and tomorrow, before readings begin to drop on Friday, plummeting to 10 below average, reaching as low as 37 on Saturday. On the Pacific front, Los Angeles will be experiencing normal temperatures today, with high and low at 73 and 56 degrees Fahrenheit, respectively, before enduring a cool-down during the weekend, when readings will drop to several degrees below average.
NatGasWeather.com expects cooler-than-normal weather over the central and eastern US in the first week of May, suggesting higher-than-average heating demand, with more unsettled weather in the following weeks. In the West and Plains, however, high pressure build-up is set to slightly increase the temperature, lowering gas usage for heating.
US stockpiles
A major shift in the market took place on Thursday, as natural gas rallied on a bullish EIA storage report which signified better-than-expected demand. The government agency reported that US natural gas inventories rose by 24 billion cubic feet in the seven days through April 11th, compared to analysts’ forecasts for a 34-bcf jump. Total gas held in US underground storage hubs amounted to 850 billion cubic feet, 50% below last year’s 1 700-bcf supplies level during the comparable week. The deficit to the five-year average storage narrowed to 54.3% from 54.7% in the previous week, retreating from an 11-year low.
Tomorrow is due the next weekly report on natural gas storage levels by the Energy Information Administration, with eyes on the replenishment figure, and, considering the US has been experiencing very active weather recently, it would take a significant change in inventories to shock markets.
Technical view
According to Binary Tribune’s daily analysis, in case natural gas for settlement in June penetrates the first resistance level at $4.790 per million British thermal units, it will encounter next resistance at $4.821. If breached, upside movement will probably attempt to advance to $4.869 per mBtu.
If the energy source drops below its first resistance level at $4.711 per mBtu, it will see support at $4.663. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.632 per mBtu.
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