Natural gas trading outlook: futures steady near 6-month low

Natural gas futures were little changed during midday trade in Europe today. Weather patterns called for below-par temperatures for some highly-populated areas of the US, lowering cooling demand and allowing for a higher natgas inventory build up.

Natural gas futures for delivery in September were up 0.08% to trade at $3.837 per million British thermal units (mBtu) at 11:33 GMT on the NYMEX today. Prices ranged from $3.826 to $3.844 per mBtu. The contract gained 0.95% on Monday, after adding some 0.3% last week, when a six-month low of $3.725 was reached.

This week’s Energy Information Administration (EIA) report will reveal another significantly larger-than-average build for natgas inventories, analysts at NatGasWeather.com said. Last week’s injection was almost double the average at 88 billion cubic feet.

The analysts also say, that the following week’s log will post more large gains, as the weather this week will allow for moderate cooling demand at most. Markets will struggle for direction, as temps will climb along with rising supplies.

US weather outlook

NatGasWeather.com reported today that the northern and western US will see showers, storms and comfortably low temperatures in the next few days, some localized drops to the 60s possible, followed by a several-degree rise for temps, as high pressure builds up towards weeks end. The southern US will remain quite hot, with highs reaching triple digits. Overall cooling demand will be low-to-moderate.

Next week will start off with high pressure and seasonal to above-seasonal temps, the analysts suggest. Around midweek, however, a cooler Canadian system is due to head south into the US, bringing rains and clouds, and lowering temps back to comfortable, allowing for more sizable natgas builds.

New York will be warmer than usual today, though quite rainy, according to AccuWeather.com. Temps will range 71-87 degrees Fahrenheit, a few above average, while a thunderstorm will fail to lower readings by too much in the afternoon. Temps will gradually decline over the course of the week, dropping to a few below average. Chicago will be cooler than usual today, temps several degrees below normal at 63-76. Readings will remain largely the same for the next few days, and might even drop a few, before rising to just below-seasonal for the weekend.

Down South, Houston will see a couple of stray thunderstorms today and tomorrow, as temperatures keep to the average, ranging 75-93 degrees Fahrenheit. Starting midweek, temps will slightly rise as sunny weather comes through, though some thunderstorms could very well spoil an afternoon. Over on the West Coast, Los Angeles is set for a normal and boring week, with average temps, between 63 and 84, and mostly sunny days.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, natgas September future’s central pivot point on the NYMEX stands at $3.816. In case the contract penetrates the first resistance level at $3.871 per million British thermal units, it will encounter next resistance at $3.908. If breached, upside movement will probably attempt to advance to $3.963 per mBtu.

If the energy source drops below its first resistance level at $3.779 per mBtu, it will see support at $3.724. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.687 per mBtu.