Natural gas trading outlook: futures climb ahead of EIA storage report, cool US weather

Natural gas futures were higher during early trade in Europe today. The US will report on nat gas storage levels later today, and analysts suggest another sizable increase, though the figure is projected below 100 billion cubic feet for the first time in 8 weeks.

Front month natural gas futures, due in August, added 0.19% at the New York Mercantile Exchange to trade for $4.178 per million British thermal units at 7:58 GMT today. Prices ranged $4.164 to $4.186 per mBtu. The contract dropped 0.81% yesterday, and so far has lost more than 5% this week, reaching a six-month low of $4.129 per mBtu.

“The lack of extreme heat is putting pressure on gas prices,” Tom Saal, senior vice president of energy trading at FCStone Latin American LLC in Miami, said for Bloomberg. “Traders who had been bullish at the end of the winter are losing their resolve after all of these bigger-than-normal storage injections.”

The US Energy Information Administration (EIA) will report on natural gas stockpiles weekly build up later today, and NatGasWeather.com predicts an injection of 86-92 Billion cubic feet (Bcf), about 15 Bcf more than the 5-year average for the week.

Last week’s 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 Thursday that the southern and western US will remain very hot for the next seven days, with regular temperature peaks into triple-digit range. 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 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 69-83 degrees Fahrenheit, as several thunderstorms are also expected. Readings will remain relatively unchanged over the course of the week, though with mostly sunny weather, and temps will remain slightly below average into next week. Chicago will also see mostly sunny weather today, as temperatures keep between 61-75 Fahrenheit, some 10 degrees below average. Temps will remain low 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 today, at 73-93 degrees, alongside a stray thunderstorm later on Thursday. Readings are expected to slightly climb over the following days and into the next one, with mostly sunny weather. Over on the West Coast, Los Angeles will also be cooler than normal today, with readings between 64-79 degrees. Temps will remain such up to Sunday, when they will rise to above-average with highs in the upper 80s, before entering normal range next week.

Technical view

According to Binary Tribune’s daily analysis, in case natural gas for settlement in August penetrates the first resistance level at $4.212 per million British thermal units, it will encounter next resistance at $4.255. If breached, upside movement will probably attempt to advance to $4.279 per mBtu.

If the energy source drops below its first resistance level at $4.145 per mBtu, it will see support at $4.121. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.078 per mBtu.