Natural gas trading outlook: futures steady after slump, US inventories data ahead

Natural gas futures were little changed during early trade in Europe today. The blue fuel continued downwards on Tuesday after a significant loss on Monday, as the US sees some comfortably cool weather. The EIA will report its weekly reading on nat gas supplies tomorrow.

Front month natural gas futures, due in August, added 0.10% at the New York Mercantile Exchange to trade for $4.208 per million British thermal units at 8:17 GMT today. Prices ranged $4.190 to $4.217 per mBtu. The contract dropped 0.50% on Tuesday, reaching a six-month low of $4.129 per mBtu, after a massive 4.1% loss on Monday.

“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 US Energy Information Administration (EIA) will report on natural gas stockpiles weekly build up tomorrow, and NatGasWeather.com predicts an injection of 86-91 Billion cubic feet (Bcf), about 15 Bcf more than the 5-year average for the week. Last weeks natural gas storage report revealed a 100-Bcf 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.

US weather report

NatGasWeather.com reported on Wednesday 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 are subject to a cooler Canadian system tracking south, which drags temperatures down and generates thunderstorms and showers. 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 neutral 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 72-88 degrees Fahrenheit, slightly above average. Thunderstorms will pass by the area today and tomorrow, when temps will drop a few degrees. Readings will continue declining over the course of the week, though with mostly sunny weather, and temps will remain lower into next week as well. Chicago will also see mostly sunny weather today, as temperatures keep between 59-74 Fahrenheit, some 10 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 74-94 degrees, for today and tomorrow, alongside a thunderstorm later on Thursday. 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 65-81 degrees today start dropping to as little as the upper 70s later this week, several below average. Temps will, however, be 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 $4.252 per million British thermal units, it will encounter next resistance at $4.299. If breached, upside movement will probably attempt to advance to $4.361 per mBtu.

If the energy source drops below its first resistance level at $4.143 per mBtu, it will see support at $4.081. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.034 per mBtu.