Natural gas trading outlook: futures add on cool over the Midwest and East, the West will heat-up

Natural gas grew steadily during early trading in Europe, after a severe storm rampaged through much the central US. Weather reports projected an extended period of cold for the central and eastern states, while the West will see higher power demand due to a heatwave, strengthening support for the blue fuel. Rising storage inventories in the US kept a lid on prices.

Natural gas futures due in June added 0.58% at the new York Mercantile Exchange by 9:44 GMT, to trade for $4.685 per million British thermal units, prices ranging from $4.648 to $4.692 per mBtu. Friday saw a daily low of $4.644 per mBtu, the deepest trough in 10 days. The contract has lost 1.89% since the report on stockpiles in the US on Thursday.

Natgasweather.com reported that the strong Spring storm, which induced deadly tornadoes over the weekend, will dominate the weather over much of central US, keeping temperatures lower. Over the course of the week a cool weather system from Canada will very slowly move-in through the Midwest, towards the eastern and southern states, extending the period of cold for much of the US. The East will see a few days of near-normal temperatures, before the arrival of the cooler Canadian air. The Pacific coast is set for a completely different experience, with readings projected to top the average by quite a significant margin, and for an extended period. Overall a slightly-higher than average consumption of natural gas for the next few days is in line with a cooler weather over much of central and eastern states, while the heatwave over the West will induce higher power demand as air-conditioners are put to work.

Accuweather.com put readings for New York at 49 to 64 degrees Fahrenheit for today, April 28th, keeping on par with the average. Tomorrow and Wednesday will see a strong cold blast, readings staying below 53 degrees for the most part, before a significant warm-up beginning Thursday. Chicago is set for a stormy few days. Monday will be colder than normal, though readings will not drop below 50, while Tuesday will see periods of warmth, reaching as much as 64 degrees, before further cold blasts starting Wednesday. In the West, Los Angeles will be heating-up today with temperatures as high as 78 Fahrenheit. Beginning on Tuesday readings for the next few days are projected to top 90 degrees, or 20 above average.

US stockpiles

Last Thursday the Energy Information Administration released its weekly natural gas storage report for the week ended April 18th, which revealed a growth of 49 billion cubic feet in inventories, beating forecasts of a 44 bcf gain. It exceeded the previous week’s figure of a 24 bcf increase, bringing the volume of natural gas in storage to 899 bcf. Improving supplies push down on the blue fuel. However, even with last week’s gains the figure is still 52.9% below the 5-year average and prices remain at higher levels than before, after a significantly colder than usual winter in the US drained supplies of the heating fuel.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in June penetrates the first resistance level at $4.717 per million British thermal units, it will encounter next resistance at $4.777. If breached, upside movement will probably attempt to advance to $4.813 per mBtu.

If the energy source drops below its first support level at $4.621 per mBtu, it will probably test $4.585. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.525 per mBtu.