Natural gas futures were lower during early trade in Europe today. The blue fuel slumped last week, to close some 6% lower after a cold Canadian system tracked through the US, lowering cooling demand.
Front month natural gas futures, due in August, dropped 0.92% at the New York Mercantile Exchange to trade for $4.108 per million British thermal units at 9:42 GMT today. Prices ranged from a six-month low of $4.101 to $4.150 per mBtu. The contract dropped 6% last week pressured by moderately cool US weather.
“It looks like the market is going to be in balance heading into the winter,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said for Bloomberg on July 11. “The combination of modest summer weather and robust drilling has let people believe that inventory will grow to normal levels.”
The US Energy Information Administration (EIA) reported on natural gas stockpiles weekly build up last Thursday, to reveal a 93 Billion cubic feet (Bcf) gain for inventories, 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.
NatGasWeather.com suggested an injection of 95-100 Bcf will be reported in this weeks log, about 25 Bcf more than the 5-year average gain for the reported week.
Levels remain 24.4% below readings from last year, but confidence that stockpiles will replenish completely before the start of heating season in November grows.
“The weather’s been mild and traders have been dumping their bullish gas positions,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said for Bloomberg ahead of the report. “Storage has been growing at a rapid pace week after week.”
US weather report
NatGasWeather.com reported on Monday that a cold blast from Canada will be heading south into the US, dragging temperatures down midweek, and reaching as far as Texas. Readings behind the cool front are projected to be some 15-20 degrees Fahrenheit below average at places. The system will also bring many showers and locally heavy rains. The extreme southern and the western US remain in the grips of strong and resilient high pressure, supporting the moderately high temperatures. Later this week, higher pressure will be coming to the Midwest and Northeast as well, normalizing temps after the cool Canadian blast. Cooling demand over the next seven days will probably remain lower than normal.
In the 8-14 day outlook, NatGasWeather.com projected a neutral trend for the US. Higher pressure will be returning to the northeastern half of the US after the cooler Canadian system passes by early in the projected period. However, more blasts will be pushing southwards into the Northeast and Midwest later in the period, probably lowering temps again.
According to AccuWeather.com, New York will be moderately warm today, with temperatures between 73 and 83 degrees Fahrenheit. Several thunderstorms, some strong, are expected through to Thursday, though temps will remain relatively unchanged at slightly below-seasonal levels. Chicago will see cooler-than-normal weather today, with readings ranging 54-78, several below average. Showers and a storm are expected in the area today and tomorrow. Readings will drop a further 7-10 degrees tomorrow, to stand some 15-20 below usual, before they start climbing again midweek, though temps will probably remain below-normal through to next week.
In the South, Houston will see warmer-than-normal weather today, with readings between 76 and 96 degrees Fahrenheit, a few degrees above average. Thunderstorms are bound for today and the following two days, as readings slowly drop to the average. Over on the West Coast, Los Angeles will be sunny and normally warm today. Temperatures will range 68-84 degrees. Starting tomorrow, readings will slowly fall to stand several degrees below average ahead of 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 $4.168 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.
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