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Natural gas futures weekly recap: September 8 – September 12

Natural gas rose on Friday and settled the week higher as low temperatures across some US areas spurred some heating demand and as a tropical circulation tracking over Florida stood a chance, albeit minor, to strengthen early next week and affect core natural gas infrastructure along the Gulf Coast.

On the New York Mercantile Exchange, natural gas futures for settlement in October rose by 0.89% on Friday to close the week at $3.857, marking a 1.8% weekly advance. Prices ranged between Tuesdays weekly high of $4.016 and Mondays low of $3.761. The contract plunged 3.31% on Thursday following the release of EIAs bearish inventories data.

Natural gas prices drew support amid fears that a tropical circulation which tracked over Florida could strengthen up and impact core natural gas infrastructure along the Gulf Coast early next week.

Although most of the weather data showed this has a minor chance of occurring, NatGasWeather.com analysts said that yesterdays flare up in thunderstorms helped enhance a low level circulation that is difficult to detect.

“If this holds together, there could be some real chance that this thing strengthens a bit more rapidly than the models and national forecasts expect,” NatGasWeather.com said.

US inventories

The power-station fuels gains were however capped amid expectations for comfortable readings next week and after the Energy Information Administration reported a larger-than-expected build in US natural gas inventories last week.

On Thursday, the EIA reported that inventories rose by a much higher-than-expected 92 billion cubic feet (Bcf). The figure also represents the 21st straight week of above-average injections and narrowed the deficit to the 5-year average to just 14.2% at 2.801 trillion cubic feet of natural gas in storage.

This week’s cold spell will likely have a positive impact on upcoming natural gas inventory builds, further adding to momentum as the market enters Fall shoulder season.

“We expect next week’s build to come in around 90-95 Bcf , and the ones after to be over 100+ Bcf,” NatGasWeather.com said.

US weather

The cool Canadian system which brought the first snowfall to the US this week has reached the far Southeast and lost much of its potency, with temperatures already starting to climb. Another cool front, however, is advancing through the Great Lakes and will bring reinforcing cool to the Northeast and the northern Midwest, killing most of any cooling and prompting some light heating demand. Southern California temps are nearing record highs, meanwhile, driving some significant cooling in the highly populated region.

“Weather patterns will be very comfortable overall and much larger than normal builds will be lining up for the rest of September,” the analysts at NatGasWeather.com added. “Waning late September sun will limit the amount of cooling needed.”

According to AccuWeather.com, the high in New York on September 16th will be 72 degrees Fahrenheit, 3 below normal, and is expected to remain at these levels through September 20th. Detroit will see readings peak at 65 degrees on September 15th, 9 beneath seasonal, followed by a warmer weekend with highs of 83 and 74 degrees on September 20th and 21st, respectively.

To the South, Texas City will see readings max out at 88-91 degrees between September 14th and September 16th, compared to the average of 88, before easing to as much as 78 degrees on September 21st. On the West Coast, the high in Los Angeles on September 15th will be 98 degrees, 15 above usual, followed by a drop to 88-91 degrees, 5-8 below normal, between September 18th and September 21st.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, October natural gas futures’ central pivot point stands at $3.834. In case the contract penetrates the first resistance level at $3.882 per million British thermal units, it will encounter next resistance at $3.907. If breached, upside movement will probably attempt to advance to $3.955 per mBtu.

If the energy source drops below its first support level at $3.809 per mBtu, it will next see support at $3.761. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.736 per mBtu.

In weekly terms, the central pivot point is at $3.878. The three key resistance levels are as follows: R1 – $3.995, R2 – $4.133, R3 – $4.250. The three key support levels are: S1 – $3.740, S2 – $3.623, S3 – $3.485.

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