Natural gas trading outlook: futures lower, comfortably cool weather over US expected

Natural gas futures were lower during midday trade in Europe today. The blue fuel fell sharply on Monday, after a three-day weekend for the US, with the US Northeast and Midwest ahead of some moderately cool days, spurring speculation of another massive weekly injection for inventories.

Front month natural gas futures, due in August, dropped 0.97% at the New York Mercantile Exchange to trade for $4.184 per million British thermal units at 12:11 GMT today. Prices ranged from a six-month low of $4.164 to $4.234 per mBtu. The contract lost 4.1% on Monday, after dropping about 0.9% last week.

“Without calls for sustained heat across the major gas-consuming regions of the country, we continue to come under pressure,” Gene McGillian, analyst and broker at Tradition Energy in Stamford, Connecticut, said for Bloomberg. “Gas coming out of the ground is slowly eating away the fear that we won’t have enough gas for next winter heating season.”

The Energy Information Administration’s weekly natural gas storage report revealed a 100-billion cubic feet gain in nationwide US inventories in the seven days through June 27th, well above the average gain, but in line with expectations. NatGasWeather.com had predicted a gain between 99 and 103 billion cubic feet, while the five-year average build for the respective period was 78 bcf, and for this week the analysts at the site suggest a gain closer to 90 Bcf.

US weather report

NatGasWeather.com reported on Monday that the southern and western US will remain very hot for the next seven days, with regular temperature peaks into triple digits. Meanwhile, the Midwest and Northeast will be subject to a cooler Canadian system tracking south, which will drag temperatures down midweek. However, soon after the system passes readings will climb into the 90s again. Cooling demand is expected to remain moderate-to-high this week.

In the 8-14 day outlook, NatGasWeather.com projected a colder trend for the US. Strong high pressure is set to dominate southern and western US, allowing for sunny and very hot days. However, more Canadian cooler systems are expected to turn south into the northeastern US, decreasing temperatures to comfortable for the region and lowering cooling outlooks.

According to AccuWeather.com, New York will be moderately warm today, with temperatures at 75-91 degrees Fahrenheit, just below the average. Afternoon thunderstorms will pass by the area today and then tomorrow, when temps will drop a few degrees. Readings will continue declining over the course of the week, though with mostly sunny weather, and will continue into next week as well. Chicago will also see a pm thunderstorm today, as temperatures keep between 61-79 Fahrenheit, several degrees below average. Temps will be lowering up to the weekend, when a brief reversal of the trend is expected, before continuing downwards next week.

In the South, Houston will see normal temps, at 74-92 degrees, for today and tomorrow, alongside a few stronger thunderstorms. Readings are expected to slightly climb over the week and into the next one, with mostly sunny weather. Over on the West Coast, Los Angeles will also be cooler than normal this week, as readings between 66-85 degrees today start dropping to as little as the upper 70s later this week, several below average. Temps will start climbing later in the week to stand above average again for the weekend.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in August penetrates the first resistance level at $4.399 per million British thermal units, it will encounter next resistance at $4.431. If breached, upside movement will probably attempt to advance to $4.460 per mBtu.

If the energy source drops below its first resistance level at $4.338 per mBtu, it will see support at $4.309. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.277 per mBtu.