Natural gas futures weekly recap, July 7 – July 11

Natural gas rebounded from the lowest level in six months on Friday as weather forecasters predicted above-normal temperatures in some US areas. Nevertheless, the power-station fuel settled the week 6% lower after the EIA reported a larger-than-average build in nationwide gas inventories and as weather over highly-populated regions cooled.

On the New York Mercantile Exchange, natural gas futures for settlement in August rose by 0.63% on Friday to close the session at $4.159 per mBtu, having shifted in a daily range between a six-month low of $4.106 and $4.159 per mBtu. The energy source fell for four straight trading sessions through Thursday and settled the week 6% lower.

Futures shed some losses on Friday as weather agencies predicted above-seasonal temperatures in some highly populated US areas, which however couldnt change the general trend. According to MDA Weather Services, cited by Bloomberg, the East Coast will see warmer-than-usual conditions between July 21 and July 25.

However, a larger-than-average build in nationwide US gas inventories kept prices pressured to the downside. The US Energy Information Administration (EIA) reported on Thursday that stockpiles added 93 Billion cubic feet in the week ended July 4th, 21 Bcf more than the 5-year average gain for the week. NatGasWeather.com had predicted an injection of 86-92 Bcf, while a Bloomberg survey had projected 89 Bcf. Although levels remain 24.4% below readings from last year and were the least for the respective period since 2003, confidence that stockpiles will replenish completely before the start of heating season in November remained the moving force.

US weather

NatGasWeather.com reported on Friday that the cool system that brought storms and rains over the eastern US will finally be tracking offshore, allowing for rising temperatures during the weekend. However, early next week another cool blast will be moving south through the Midwest and Northeast, reaching as south as Texas, and lowering temperatures to comfortable levels. Cooling demand is expected to be moderate-to-low for the next seven days.

In the 8-14 day outlook, NatGasWeather.com projected a neutral trend for the US. A cooler Canadian system is expected to penetrate deep into the South, lowering temperatures to comfortable levels, and leaving only the extreme southern and the western parts of the US subject to above-seasonal heat. The central and eastern US will see mild conditions, also lowering nat gas consumption outlooks.

According to AccuWeather.com, the high in New York on July 14th will be 85 degrees Fahrenheit, 1 degree above usual, but a following cooling will bring temperatures to below-seasonal through July 21st. Readings in Chicago will peak at 78 degrees Fahrenheit tomorrow, well below the average of 85 degrees, and will also remain beneath normal throughout the entire week. In the South, Houston will see highs reaching 95 degrees on Monday, 3 above normal, but a follow-up cooling will ease readings to several degrees below usual through July 27th. On the West Coast, Los Angeles will enjoy partly sunny weather with highs at 84 degrees Fahrenheit, 1 degree above normal, but as in most other areas, readings will decline to below-usual throughout July. The high on July 27th is expected to be 76 degrees, compared to the average of 84 degrees.

Technical view

According to Binary Tribune’s daily analysis for Monday, in case natural gas for settlement in August penetrates the first resistance level at $4.168 per million British thermal units, it will encounter next resistance at $4.190. If breached, upside movement will probably attempt to advance to $4.221 per mBtu.

If the energy source drops below its first resistance level at $4.115 per mBtu, it will see support at $4.084. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.062 per mBtu.