Natural gas futures declined during midday trade in Europe today. Warmer weather over much of the US, the worlds top-consumer of the blue fuel, accounting for about 21% of total demand, will probably bump up air cooling demand.
Front month natural gas futures, due in July, dropped 0.55% at the New York Mercantile Exchange to trade for $4.681 per million British thermal units at 12:43 GMT. Prices ranged from $4.672 to $4.726 per mBtu. The contract dropped 0.68% yesterday, though it did reach a five-week high at $4.886 per mBtu, after closing about 0.8% higher for last week on Friday, with a massive 5.63% daily increase on Thursday.
Natural gas surged by the most in almost four months last 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 agency’s 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 year’s level and a 35.3% deficit to the five-year average.
The report for the week through June 13 is due this Thursday, and will probably reveal a 100-105 Bcf gain, NatGasWeather.com said, which would be 15-20 Bcf more than the 5-year average gain for the period. The above-normal temperatures will dent gains this and the following week, with more heat at the start of July.
Power demand usually spikes during summer, as air conditioners are put to work, and power stations account for 30% of US natural gas consumption. Usually there is a direct correlation between rising summer temperatures and natural gas prices.
Weather report
NatGasWeather.com reported that Tuesday will be quite hot for most of the central and eastern US, as well as the South, where humidity is also set to rise, and overall cooling demand will be moderate-to-high. Over the following days a cool weather system will track out of the Rockies and attempt to push into the Midwest and the Northeast, though a high-pressure build should prevent it from advancing too far. The South will remain in the grips of high-pressure and rising temps, with three-digit readings in many places. The western US remains cooler, as a Pacific weather system is moving through.
In the 8-14 day outlook, NatGasWeather.com projects a largely neutral trend, with areas in the Northeast and Midwest cooler and rainy, while the South will be quite hot, bumping up air cooling. The first week of July will probably bring rising temperatures.
New York will be warmer than usual today, according to AccuWeather.com. Readings will range 72-87 degrees Fahrenheit, several above average, and will remain relatively high over the next two days. Boston will also be warmer than usual, though a strong thunderstorm will pass through tomorrow.
Chicago is set for quite a rainy and cloudy week, with many a thunderstorm, some heavy. Readings will be above average, ranging upper 60s – lower 80s. Down South, Houston will also be warmer than normal, with highs into the 90s. However, thunderstorms will be abound over the next few days, before a further rise in temps for the weekend.
Over on the West Coast, Los Angeles will be cooler than usual today, with temps ranging 60-74. A gradual warm up will take place over the course of the week. Seattle will also be cooler, though sunny. Readings will be between 50 and 66.
Technical view
According to Binary Tribune’s daily analysis , in case natural gas for settlement in July penetrates the first resistance level at $4.839 per million British thermal units, it will encounter next resistance at $4.971. If breached, upside movement will probably attempt to advance to $5.056 per mBtu.
If the energy source drops below its first resistance level at $4.622 per mBtu, it will see support at $4.537. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.405 per mBtu.
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