Natural gas futures traded lower during early European hours today, after muted activity on Monday, due to a holiday in the US. Weather reports project more warm days to follow, with some cooler periods later in the week. Previously, mild weather and growing shale production made possible significant gains for US supplies recently, pressuring contracts to three consecutive weekly declines.
Front month natural gas futures, due in June, fell by 0.70% at the New York Mercantile Exchange to trade for $4.374 per million British thermal units at 9:17 GMT. Prices ranged from $4.373 to $4.406 per mBtu. Last week the blue fuel lost 0.01%, nearing a two-month low at $4.349 per mBtu.
According to AccuWeather.com New York will be very hot today, with temperatures ranging 62 to 78 degrees Fahrenheit, several above average. Tomorrow readings will drop 10 to 15 degrees and an afternoon thunderstorm is possible. The slightly below-average temps will remain through to Friday, and the weather will normalize into next week, with June heralding the start of the hot season.
Boston will be cloudy and cooler than normal today, with temperatures ranging 46 to 67, several below average. Tomorrow will bring a sizable decline in readings, with highs in the mid 50s. Starting on Thursday, readings will begin climbing to be near-normal during the weekend, with temps ranging 52-65 degrees, which is still a few short of average. Next week will probably bring a sizable warm up, to mark the beginning of the Summer months.
The weather over Chicago will be somewhat strange today, with temperatures several degrees above normal at 59-78 today, though with a strong thunderstorm expected. A significant cooldown is forecast for tomorrow, with readings dropping 10 degrees to a few below average. Over the weekend the weather will be sunny and readings will range 60 to 77, or several degrees above usual.
On the West Coast, Los Angeles will be slightly warmer than usual throughout the whole week, with highs in the upper 70s and low 80s. Up North, Seattle will be mostly cloudy with temperatures ranging high 40s to mid 60s up to the weekend, when sunny and warm weather will bump readings to a comfortable 50-75 range.
US inventories
Last Thursday, the EIA released its weekly report on natural gas storage levels in the US for the week through May 16. The report showed that supplies of the blue fuel had added 106 billion cubic feet (bcf), exceeding expectations of 100-103 bcf growth. The figure records the biggest weekly gain since June 2013, and is 16 bcf above the 5-year average increase for the week.
However, stocks still need to recover more than 2.5 trillion cubic feet in order to restore pre-winter levels before November. This equals an average of more than 100 bcf gains each week till then, and as summer season sets in, such growth might be hard to achieve.
Shale gas production is peaking, but power demand will be inevitably growing, as air conditioners are put to work for the hot summer months ahead.
Technical view
According to Binary Tribune’s daily analysis, in case natural gas for settlement in June penetrates the first resistance level at $4.425 per million British thermal units, it will encounter next resistance at $4.444. If breached, upside movement will probably attempt to advance to $4.478 per mBtu.
If the energy source drops below its first resistance level at $4.372 per mBtu, it will see support at $4.338. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.319 per mBtu.
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