Natural gas trading outlook: futures recover some losses; supplies pressured the fuel below a 2-month high

Early European trading saw front month natural gas regain some of last sessions losses, when a report on significant gains in supplies in top consumer US prompted bearish trade. Weather reports project a slightly cooler weather over most of the northern and eastern states.

Front month natural gas futures, due in June, added 0.59% at the new York Mercantile Exchange, to trade for $4.747 per million British thermal units at 9:08 GMT. Prices ranged from $4.710 to $4.748 per mBtu. Yesterday the contract lost 1.99% on improving supplies in the US, after on Wednesday it recorded the highest midday price since winter at $4.852 per mBtu.

Natural gas in storage hubs in the US recorded a gain of 82 billion cubic feet to stand at 981 bcf for the week ended April 25th. The gain comes in-line with expectations, and it pressured the blue fuel as inputs have outweighed demand in the US, which consume 21% of the worlds natgas production.

Inventories are still recovering after an extremely cold winter drained supplies. With last weeks major gains, they stand at 44.1% below the figure from last year, and 50.1% under the 5-year average.

US weather reports

Natgasweather.com reported that the big Spring storm, which caused deadly tornadoes in the US, will finally be trailing off of the eastern coastline later today. Cool blasts will be tracking through the Great Lakes and the Northeast in the next few days, to keep readings below average for most of the eastern and central states. Early next week, a build-up of high pressure over the South Plains will meet the cold Canadian air, to result in very unsettled weather, with thunderstorms, local heavy rains and wide-ranging temperatures. The South and Pacific Coast will be quite hot in the next few days, before a cooler next week brings readings to normal range.

According to Accuweather.com, New York will have a normal May 2nd, with temperatures between 50 and 68 degrees Fahrenheit. Tomorrow the weather will also be in-line with the usual for this time of year, before a slightly cooler start of next week brings readings down 3-4 degrees. Chicago is expected to see cooler weather today, temperatures ranging from 45 to 55 degrees, or 6-7 below average. Over the next few days a slight warm-up is expected to bring readings closer to usual, before next week brings significantly warmer weather, with temperatures several degrees above normal. On the West Coast, Los Angeles registered the highest temperature on record for May 1st yesterday, at 92 degrees Fahrenheit. Starting today the weather will begin cooling. Early next week forecasts put readings at slightly below-average, with lows at 55 and highs at 71.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in June breaches the first resistance level at $4.792 per million British thermal units, it will encounter next resistance at $4.866. If broken, upside movement will probably attempt to advance to $4.909 per mBtu.

If the energy source drops below the first support level at $4.676 per mBtu, it will probably test $4.634. If the second key support zone is breached, the blue fuel’s downward movement may extend to $4.560 per mBtu.