Natural gas futures were higher during midday trade in Europe today. Weather forecasts call for milder weather over the Midwest and Northeast, limiting cooling demand outlook. US nat gas inventories seen gaining more than previous years for this week as well.
Front month natural gas futures, due in July, added 0.61% at the New York Mercantile Exchange to trade for $4.473 per million British thermal units at 12:07 GMT today. Prices ranged from $4.431 to $4.483 per mBtu. The contract dropped 1.81% yesterday, after losing about 4.5% last week.
Natural gas extended its weekly decline on Thursday after the Energy Information Administration reported a larger-than-projected build in US natural gas inventories during the week ended June 13th. The log revealed a gain of 113 billion cubic feet, while analysts at NatGasWeather.com had suggested a 105-110 Bcf injection. The 5-year average gain for the week is 85 Bcf. Inventory levels remain 29.1% below last year’s readings for the same week.
However, movement to the downside is expected to be limited as the US enters the summer season when high temperatures spur electricity demand to power air conditioning, with power stations accounting for 30% of US natural gas consumption. The above-normal temperatures over the US recently will probably dent gains in the report this week, which will cover the seven days ending June 20.
“The latest forecasts suggests that the call on nat gas for cooling demand will not be atypical for this time of the year and thus inventory injections are likely to continue to outperform the historical injections,” Dominick Chirichella, senior partner at the Energy Management Institute in New York, said in a note to clients today, cited by Bloomberg.
Chirichella added that blue fuel stockpiles probably expanded by 101 Billion cubic feet (Bcf), while Tim Evans, an energy analyst at Citi Futures in New York, is expecting a gain of 93 Bcf, according to Bloomberg. NatGasWeather.com suggests a gain of about 105 Bcf.
US weather report
NatGasWeather.com reported that the US will see quite unsettled weather this week, with plenty of storms and heavy rains. The central and eastern US will see temperatures drop several degrees, accompanied by storms and rains, while the South will remain seasonably warm, with highs in the 90s. Later in the week, the Northeast and Midwest will also start warming, to see readings in the high 80s. Overall cooling demand will probably remain moderate.
In the 8-14 day outlook, NatGasWeather.com projects a relatively neutral trend for the US, with an upward bias. The northern half of the country will probably have some stormy and rainy days, though a high-pressure build will prevent too much cooling, and will allow for a rise in temperatures in early July.
New York will be quite sunny and moderately warm today, according to AccuWeather.com. Readings will range 69-81 degrees Fahrenheit, which is normal for the season. Showers and thunderstorms are due for the next two days, though temps will slightly rise, before a cooling later in the week. Boston temperatures will also be seasonal today, between 64 and 81, with mostly sunny weather. The following two days will bring storms and rains, while readings drop a few degrees.
Chicago is set for rain and clouds today, with a possible thunderstorm. Readings will be below average, ranging 62-79 degrees. Starting Wednesday, readings will drop, but the skies will clear for a mostly sunny remainder of the week. Down South, Houston will see quite a few storms in the following days, though temperatures will remain seasonal, ranging 75-90.
Over on the West Coast, Los Angeles will have mostly sunny weather over the following few days, with readings ranging lower 60s to about 80, normal for the season. Seattle will be cloudy today, with temperatures between 55 and 70, just below average. Readings will slightly climb tomorrow, before dropping to several below average later this week.
Technical view
According to Binary Tribune’s daily analysis, in case natural gas for settlement in July penetrates the first resistance level at $4.537 per million British thermal units, it will encounter next resistance at $4.627. If breached, upside movement will probably attempt to advance to $4.678 per mBtu.
If the energy source drops below its first resistance level at $4.396 per mBtu, it will see support at $4.345. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.255 per mBtu.
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