Natural gas futures were higher during early trade in Europe today, as traders saw weather patterns calling for rising temps over the southern US. Analysts, however, project widespread comfortable temps, set to ease natgas inventories into several massive weekly builds.
Front-month natural gas futures for settlement in October on the New York Mercantile Exchange traded at $3.887 per million British thermal units (mBtu) at 9:52 GMT, up 0.78% for the day. Prices ranged from $3.839 to $3.897 per mBtu. The contract added ~1.8% last week.
Natural gas markets were scared into a moderate rally last week, as a cool Canadian system and an initially threatening-looking tropical system over the Gulf sparked bullish bids. Both systems turned out to be short-lived, though, and traders now eye several weeks of comfortable temperatures, set to help into several triple-digit weekly inventory builds.
“Weather patterns after last week’s cool blast should play out to be quite bearish,” analysts at NatGasWeather.com wrote in a note to clients today. “With widespread 70s and 80s setting up over a majority of the country, massive 100+ Bcf builds should be expected for many weeks to come.”
US weather outlook
A mild cool blast will track through the Great Lakes and into the US Midwest and Northeast this week, keeping temperatures comfortable, killing much of any cooling demand and probably inducing some very light heating. Meanwhile, the South will be warming as high pressure builds, which will eventually break into the North, heating the Midwest and Northeast later on. The West Coast is experiencing a very hot few days ahead of moderate temps coming back by the weekend. Overall cooling demand across the US will be moderate-to-low for the next few days, with insignificant heating.
“Weather patterns do not look hot or cold enough for a long enough period of time to be considered threatening to the nat gas markets,” the analysts at NatGasWeather.com said. “Prolonged early season winter weather will still be numerous weeks out.”
New York is set for a mostly sunny Monday, according to AccuWeather.com, with comfortable temperatures at 60-73 degrees Fahrenheit, just a few below average. Monday will set the pace for the rest of the week, with plenty sun and pleasant temps. Chicago remains quite cool, with readings no higher than 60 today, while lows might dip into the 40s. Tomorrow is also set to be quite cool, though the clouds and rains will scatter, opening the rest of the week for slightly higher temps, though still at least 10 below the mid 70s average high.
Down South, Houston is having a nice and warm week, readings reaching to the upper 80s, though clouds and storms will be abound, while lows will not drop below mid 70s. Over on the West Coast, Los Angeles is in the grips of a heatwave. On Monday temperatures will reach as high as the upper 90s, and through to Thursday it will remain very hot, with highs regularly into the 90s. Thursday will break the spell, with temps dropping as much as 10 degrees, for a comfortable remainder of the week.
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.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
