Natural gas futures weekly recap, June 9 – June 13

Natural gas fell on Friday on speculations that mild US weather in the short term will limit demand but settled the week higher after prices jumped by the most in four months on Thursday as the EIA reported a smaller-than-expected build in US natural gas inventories.

On the New York Mercantile Exchange, natural gas futures for settlement in July fell by 0.48% to $4.739 per million British thermal units. Prices ranged between a five-week high of $4.793 and a daily low of $4.716. The contract surged by 5.63% on Thursday, the most since February 19th, offsetting the previous three days losses, and settled the week 0.8% higher.

The power-station fuel fell on Friday as weather forecasting agencies predicted seasonal or below-average temperatures across most of the US through June 17th before higher-than-usual readings return in the following couple of weeks.

The Midwest will see showers and thunderstorms during the weekend with temperatures remaining below the usual in the Plains and Upper Midwest but above average in the Ohio Valley. In the Northeast, readings will be about the average, with mostly dry and sunny weather, but temperatures will surge into the upper 80s and 90s on Tuesday and Wednesday, spurring electricity demand to power air conditioners. The South will see dry weather on Sunday with mostly seasonal readings but heat will build up in the upcoming week with highs again in the upper 80s and lower 90s. In the West, there will be showers and thunderstorms across some areas, with temperatures remaining near or below seasonal in a range between 60 and 70 degrees Fahrenheit.

According to AccuWeather.com, the high in Chicago on Sunday will be 83 degrees Fahrenheit, 3 above normal, before jumping to 89 degrees on Tuesday. Boston will see a high of 78 degrees today, 2 above the average, and the heat will build up to 82 degrees on Wednesday, compared to the average of 77 degrees. Readings in New York will peak at 81 degrees on Sunday, 2 degrees above usual, followed by a surge to 89 degrees on Wednesday, 9 above the average. Temperatures in Texas will be seasonal on Sunday with highs and lows at around 89 and 79 degrees Fahrenheit, respectively, and will generally remain at those levels throughout the next week. On the West Coast, readings in Los Angelest will max out at 73 degrees today, below the average of 78 degrees, and will remain beneath seasonal throughout the entire upcoming week.

Storage levels

Natural gas surged by the most in almost four months on Thursday after the Energy Information Administration reported that US natural gas inventories received a smaller-than-expected injection during the week ended June 6th. The government agencys report showed stockpiles added 107 billion cubic feet (bcf), trailing projections for a 109-bcf gain. Nationwide natural gas inventories stood at 1.606 trillion cubic feet, the lowest level for this time of the year since 2003. Albeit consistently narrowing, inventories are still running a 31.2% deficit to the previous years level and a 35.3% deficit to the five-year average.

Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami, said for Bloomberg: “We are in a period where we don’t have a lot of extreme-weather demand but extreme demand could be right around the corner. The bottom line is the uncertainty about how much gas we are going to have at the end of the season. The bears are looking at injections that are bigger than the ones we have seen.”

The EIA raised its inventories levels forecast through November, when heating demand picks up, to 3.424 trillion cubic feet, which would be more then enough to cover a harsh winter. This will require average injections of 87 billion cubic feet over the next 21 weeks, compared to the average injections of 78 bcf since April.

Technical view

According to Binary Tribune’s daily analysis for Monday, in case natural gas for settlement in July penetrates the first resistance level at $4.783 per million British thermal units, it will encounter next resistance at $4.826. If breached, upside movement will probably attempt to advance to $4.860 per mBtu.

If the energy source drops below its first resistance level at $4.706 per mBtu, it will see support at $4.672. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.629 per mBtu.