Natural gas prices steadied above the psychological $4 resistance level during early trade in Europe today, despite weather patterns calling for below-average temperatures for many highly-populated areas of the US in the coming days.
Natural gas for delivery in September traded at $4.005 per million British thermal units at 9:48 GMT in New York, up 1.09%. Prices ranged from $3.988 to a three-week high of $4.011 per mBtu. The contract added 4.3% last week.
Money managers cut natural gas net-long positions by 21% in the week through August 5, US Commodity Futures Trading Commission data show, while Goldman Sachs trimmed its Q4 natgas outlook to $4 per mBtu, down from $4.25.
“If you are a money manager and you see above-average storage injections week after week and a decline in price, selling is rational,” Tim Evans, energy analyst at Citi Futures in New York, said for Bloomberg on August 8, after the storage report. “There’s no massive heat wave consistently across the U.S. that is going to spike air-conditioning demand, and we continue to see production numbers that show robust growth.”
The Energy Information Administration reported on Thursday that US natural gas inventories rose by 82 billion cubic feet last week, which was in line with expectations and compared to a 49 Bcf average gain for the past five years. It was the fifteenth straight week of above-average injections for US inventories, and reaffirmed sentiment that stocks will fully replenish ahead of heating season, as is projected by the EIA.
Output from the Marcellus shale in the Northeast topped 15 bcf per day this month, with more capacity being added in August. Meanwhile, lower than average temperatures drove power demand for air conditioning down, lowering natural gas demand, as power stations account for nearly 30% of US natural gas consumption. The US itself has a 21% share of global natgas demand.
“There will be abundant much colder than normal Canadian air lurking just across the border from August 15 through August 21,” analysts at NatGasWeather.com, who correctly projected last week’s gain, said in a note to clients on August 8. “Moderately bearish weather and EIA builds continue.”
US weather report
New York will be seasonally warm and sunny today, temperatures between 68 and 88 degrees Fahrenheit, according to AccuWeather.com. Starting tomorrow, temps will drop some 10 degrees to a more comfortable range, with incoming storms, rains and generally moody weather. Chicago is set for another cooler-than-average day, readings ranging 63-72, about 10 below average. Temps will remain relatively unchanged, with an occasional storm or shower in the next few days.
Down South, Houston is set for another series of stormy days through to midweek, though temps will be slightly above average, slowly dropping to normal. over on the West Coast, Los Angeles is at the start of another boring week, with plenty sun and seasonal temperatures, ranging mid 60s to lower 80s.
Technical support and resistance levels
According to Binary Tribune’s daily analysis for Monday, in case natural gas for settlement in September penetrates the first resistance level at $4.001 per million British thermal units, it will encounter next resistance at $4.039. If breached, upside movement will probably attempt to advance to $4.104 per mBtu.
If the energy source drops below its first resistance level at $3.900 per mBtu, it will see support at $3.833. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.795 per mBtu.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
