Natural gas futures were lower during early trade in Europe today, as investors eye comfortable temperatures projected for much of the US in the coming days.
Front-month natural gas futures for delivery in October traded at $4.005 per million British thermal units (mBtu), down 1.48%, at 9:15 GMT on the NYMEX. Prices ranged from $3.983 to $4.078 per mBtu. The contract added ~4.3% last week.
“Recent price action has shown the markets seem to be moving on much smaller weather time frames compared to the winter season,” analysts at NatGasWeather.com wrote in a note to clients today. “If this is the case, then this week could still provide support to prices” in light of a “pathetic attempt” of a tropical storm in the far-southern Gulf of Mexico, temps climbing briefly midweek, and a small upcoming natgas build.
The group projects this weeks report will reveal a build of some 70 billion cubic feet for natural gas inventories in the US, which would be the smallest build this summer season. It would still be quite larger than the average, and mark the twentieth week of above-average injections for natgas stocks.
The analysts add, however, that the builds after this week will be coming at 80Bcf+, pressuring the blue fuel lower as inventory levels head for near-complete replenishment ahead of winter heating season, which typically starts in November.
US inventory levels are a major driver for natural gas prices, as they indicate the supply and demand in the worlds top natgas consumer, accounting for more than 21% of total demand. Booming shale production and more comfortable temperatures this summer allowed for consistently bigger than average builds.
US weather outlook
NatGasWeather.com projected milder and more comfortable temps across the northern US in the coming days, as a cooler Canadian system sweeps through, after the surge in temperatures the East Coast is currently experiencing. The South will remain relatively warm, and might see more heat later in the week, though another cool system will pare any significant temperatures. Overall cooling demand in the next seven days should be moderate.
New York is set for one of the hottest days this summer, according to AccuWeather.com, as temperatures will reach 92 Fahrenheit today, 12 above the average high, despite some clouds and a possible thunderstorm in the afternoon. Readings will drop a few degrees through to the weekend, but will remain several above usual, before sliding some 20 degrees next week. Chicago will have seasonal and sunny weather, with temps ranging upper 60s to 80, through to Friday when a temps will drop several degrees before a further drop into next week, for temperatures some 10 below average into the week of Sept. 8.
Down South, Houston will have a quite boring week, with seasonal temps at 77-90 and a few PM thunderstorms through to Friday. Over on the West Coast, Los Angeles is heading for a normal Tuesday with seasonal temps at 66-84 degrees and mostly sunny weather. Temps will drop a few degrees through to Friday, when readings will again climb to seasonal.
Technical support and resistance levels
According to Binary Tribune’s daily analysis, October natural gas futures’ central pivot point stands at $4.054. In case the contract penetrates the first resistance level at $4.096 per million British thermal units, it will encounter next resistance at $4.127. If breached, upside movement will probably attempt to advance to $4.169 per mBtu.
If the energy source drops below its first support level at $4.023 per mBtu, it will next see support at $3.981. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.950 per mBtu.
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