Natural gas futures weekly recap, May 5 – May 9

Natural gas futures fell for a third day on Friday and settled the week lower as a larger-than-expected build in US natural gas storage suggested softening demand, while weather forecasts predicted no significant temperature drops through the end of May, apart from several unimpressive cold blasts.

On the New York Mercantile Exchange, natural gas futures for settlement in June fell by 0.9% on Friday to $4.531 per million British thermal units, having ranged between days high of $4.598 and a one-month low of $4.498. The energy source added 2.4% on Tuesday but reversed gains with three straight sessions of losses, settling the week 3% lower.

Natural gas was pressured as weather forecasting agencies predicted warm temperatures across most of the US. Natgasweather.com reported that normal conditions should set up through the weekend and high pressure over the eastern parts of the country will raise temperatures to 70-80 degrees Fahrenheit across the southeastern US, Mid-Atlantic, and portions of the Northeast. The southern US will warm up as well, especially over the Plains.

Natgasweather.com also reported that a low pressure system is expected to sweep into the central US early next week, bringing cold Canadian air, showers and thunderstorms. Worsening conditions will reach the Southeast and Mid-Atlantic later in the week and there will be several reinforcing cold blasts through May 21st, after which temperatures will moderate to near normal over most of the US. Active spring weather will continue and these events will be followed by another several cold blasts through the end of the month, but they will not impress as the cold air reservoir over Canada dissipates.

According to AccuWeather.com, temperatures in New York will bottom at 53 degrees Fahrenheit on May 18th, 2 degrees below the average, before rebounding to 64 degrees on May 23rd, 8 above normal. Readings in Chicago will see a low of 46 degrees Fahrenheit on May 18th, after which they will return to seasonal levels six days later. Meanwhile, Houston is expected to see mostly sunny weather, with slightly below-average readings throughout next week, before reaching overall seasonal levels during the week after.

US inventories

The energy source was also pressured in the second half of the week after government data showed natural gas in storage in the US added 74 billion cubic feet for the week ended May 2nd, exceeding forecasts of a 71 bcf gain, to reach a total of 1 055 bcf. The increase is smaller than that of last week, which stood at 82 billion cubic feet. The slight slowdown is attributed to cooler weather over the East and a heatwave on the West Coast during the viewed period.

Inventories are still well below figures from previous years, after a harsh winter drained supplies. Currently they stand 43.0% short of last year’s reading for the regarded week, and 48.2% below the 5-year average.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in June penetrates the first resistance level at $4.587 per million British thermal units, it will encounter next resistance at $4.642. If breached, upside movement will probably attempt to advance to $4.687 per mBtu.

If the energy source drops below its first resistance level at $4.487 per mBtu, it will see support at $4.442. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.387 per mBtu.