Natural gas futures weekly recap, July 14 – July 18

Natural gas slid on Friday to the lowest level since end-November and marked a fifth straight weekly decline, the longest losing stretch in nearly two years, as mild temperatures across most of the US allowed for a yet another larger-than-expected injection in nationwide natural gas inventories.

On the New York Mercantile Exchange, natural gas futures for settlement in August fell by 0.08% on Friday to close the week at $3.951 per million British thermal units. Prices ranged between an eight-month low of $3.934 and a daily high of $3.976 per mBtu. The energy source plummeted 4% on Thursday and settled the five-day period 4.7% lower.

Gas extended its downward momentum for a fifth straight week as mild weather across most of the high-consuming US areas warranted a larger-than-projected jump in nationwide natural gas stockpiles. The Energy Information Administration reported on Thursday that inventories added 107 billion cubic feet (bcf) in the seven days through July 11th, exceeding anticipations for a rise in the range between 95 and 103 bcf. Total gas held in underground US storage hubs equaled 2.129 trillion cubic feet, narrowing the deficit to the five-year average to 25.5%, down from a record 54.7% at the end of March. Gas levels were 22.2% lower from a year earlier.

Despite the large deficit, however, sentiment remained bearish as the government agency expects stockpiles to be fully replenished before the start of the winter heating season. According to EIAs July 8 Short-Term Energy Outlook, inventories should rise to 3.4 trillion cubic feet by the end of October. Half way through the refilling phase, net injections have averaged 87 billion cubic feet per week, exceeding the needed amount by 10 billion cubic feet.

Weather patterns continued to apply downward pressure on the contract. NatGasWeather.com reported on Friday that the cold blast from Canada has pushed deep into the southern US, cooling a significant portion of the country. However, the system has now weakened and will allow for a rise in temperatures in the next few days. Another cool system over the South Plains will also impact readings, though only slightly. The extreme southern and the western US remain in the grips of strong and resilient high pressure, supporting the moderately high temperatures. Cooling demand over the next seven days will probably be low-to-moderate.

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. However, more blasts will be pushing southward into the Northeast and Midwest later in the period, probably lowering readings again.

According to AccuWeather.com, the high in New York on Monday will be 81 degrees Fahrenheit, 3 below average, but temperatures are expected to rise to seasonal or little above seasonal through August 3rd, before dropping back to below normal. Readings in Chicago will peak at 85 degrees on Monday, near the average of 84, before cooling to the high-70s through July 30th. To the South, Houston will enjoy seasonal weather with readings maxing out at 92 degrees on Monday, matching the average. Temperatures will then rise to little above seasonal through July 29th, before cooling down to the mid-80s during the next four days. On the West Coast, Los Angeles will see mostly sunny weather next week with highs reaching 78 degrees on Monday, well below the average of 84, but a following minor warming will bring readings back to seasonal levels through the beginning of August.

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 $3.973 per million British thermal units, it will encounter next resistance at $3.996. If breached, upside movement will probably attempt to advance to $4.015 per mBtu.

If the energy source drops below its first resistance level at $3.931 per mBtu, it will see support at $3.912. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.889 per mBtu.