Natural gas trading outlook: futures drop a fourth day on extended outlook for mild weather

Natural gas fell for the fourth consecutive day amid speculations for lower demand as extended forecasts called for moderating weather later in the month.

On the New York Mercantile Exchange, natural gas for delivery in December fell 1.22% to $4.134 per million British thermal units by 15:42 GMT, having ranged between $4.175 and $4.092 during the day. The energy source slid 1.46% on Wednesday to $4.185 per mBtu, marking its third straight daily decline. Prices are down 6.4% so far this week.

According to NatGasWeather.com, natural gas demand in the US during the next seven days will be high to very high, compared to normal, with a neutral to slightly warmer weather trend for the November 20 – November 26 time span.

A strong arctic blast continued to track across the eastern US, carrying below-freezing temperatures. Overnight lows over the northern Plains and Rockies are expected to drop to to single digits and below the zero mark today, while the Midwest and interior Northeast will see readings in the 20s. The cold front will reach the East today but readings wont fall as much as they did over the western parts.

During the weekend, colder-than-usual weather will spread over the entire country, apart from the Southwest, and another cold blast will hit the northern US early next week, sending temperatures falling below the freezing point and inducing strong heating demand.

However, extended weather forecasts showed moderating temperatures during the last two weeks of November, which weighed on the power-station fuel.

NatGasWeather.com reported that cold Canadian air will begin to leave the northern US starting November 20th, allowing the recent much colder-than-usual readings to rise to nearly normal. A Pacific jet steam will enter the West, paving the way for milder weather to infiltrate the northern areas of the country, allowing for a following warm-up over the central and eastern US.

Temperatures

According to AccuWeather.com, readings in New York on November 18th will range between 30 and 40 degrees Fahrenheit, below the average of 41-53, before increasing to 35-45 degrees three days later. Chicago will slide to 31 degrees on November 16th, 17 below usual, and will range between 26 and 36 degrees on November 20th.

Down South, temperatures in Houston will max out at 59 degrees on November 15th, 14 below normal, before increasing to 57 degrees on November 19th. On the West Coast, the high in Los Angeles on November 14th will be 72 degrees, 1 below normal, before increasing to as much as 74-75 degrees on November 17-18.

Supplies

The Energy Information Administration reported last Thursday that US natural gas stockpiles rose by 91 billion cubic feet in the week through October 31st, exceeding analysts’ projections for a jump of 85-87 bcf. Total gas held in US storage stood at 3.571 trillion cubic feet, narrowing its deficit to the five-year average of 3.832 trillion by 1.4% to 6.8% from a week earlier. Gas stockpiles were 6.2% below year-ago levels.

This week’s build is expected to probably be the last for the year that would provide a gain on deficits, with analysts projecting a build of around 36 billion cubic feet. Inventories rose by 22 billion cubic feet during the comparable period a year earlier, while the five-year average gain is 16 bcf. Official data is due on Friday at 15:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, December natural gas futures’ central pivot point stands at $4.185. In case the contract penetrates the first resistance level at $4.227 per million British thermal units, it will encounter next resistance at $4.269. If breached, upside movement may attempt to advance to $4.311 per mBtu.

If the energy source drops below its first support level at $4.143 per mBtu, it will next see support at $4.101. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $4.059 per mBtu.