Natural gas prices were steadily orbiting Wednesdays close during early trade in Europe today. Investors await the key report on US natgas storage levels, which usually prompts a surge in traded volumes.
Natural gas futures for September on the NYMEX were up 0.05% to trade at $3.935 per million British thermal units (mBtu) at 10:28 GMT. Prices ranged from $3.931 to a three-week high of $3.957 per mBtu. The contract added 0.92% yesterday for a total increase of about 3.5% for the week.
“It was so bad that the market was happy for seasonable weather; it seems ridiculous but as long as it is seasonable you can justify covering shorts,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said for Reuters. “As you continue to inject so much gas into storage, you limit the upside.”
The official US storage report is due later today. Analysts at NatGasWeather.com suggest a gain of 80-84 billion cubic feet (Bcf) will be reported by the EIA, while a Reuters poll also projected the injection at 84 Bcf, in comparison with an average gain for the week of 49 Bcf for the past five years.
Meanwhile, output from the Marcellus shale in the Northeast topped 15 bcf per day this month, with more capacity being added in August.
“Production in the Marcellus Region surpassed winter demand for natural gas in Pennsylvania and West Virginia several years ago and is now on track to be enough to equal the demand in those states plus New York, New Jersey, Delaware, Maryland, and Virginia combined,” the EIA said.
US weather outlook
NatGasWeather.com reported today that the northern and western US remain slightly cooler than usual with showers, storms and comfortably low temperatures, some localized drops to the 60s possible, followed by a several-degree rise for temps, as high pressure builds up towards week’s end. The southern US will remain quite hot, with highs reaching triple digits. Overall cooling demand will be moderate.
Next week will start off with high pressure and seasonal to above-seasonal temps. 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 for the Northeast and Midwest, allowing for more sizable natgas builds.
New York will be quite sunny today, according to AccuWeather.com, with temperatures ranging 65-82 degrees Fahrenheit, a few below average. Temps will slightly rise to seasonal for the weekend, before dropping slightly again early into next week. Chicago remains cooler, with temps at 66-80 Fahrenheit today, a few below average. It will be cloudy today, though the skies will be clear in the next few days, with temps keeping to a few below usual.
Down South, Houston will be slightly warmer than normal today, temps between 78-97 degrees, with an afternoon thunderstorm in the area. Readings are projected to remain a few above average for the rest of the week, as more storms are forecast ahead of next week. Over on the West Coast, Los Angeles is set for a sunny and pleasant remainder of the week, with temperatures just below the 64-84 seasonal range.
Technical support and resistance levels
According to Binary Tribune’s daily analysis, natgas September future’s central pivot point on the NYMEX stands at $3.920. In case the contract penetrates the first resistance level at $3.963 per million British thermal units, it will encounter next resistance at $3.994. If breached, upside movement will probably attempt to advance to $4.037 per mBtu.
If the energy source drops below its first resistance level at $3.889 per mBtu, it will see support at $3.846. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.815 per mBtu.
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