Natural gas futures weekly recap, November 24 – November 28

Natural gas fell further on Friday, marking a sizable weekly decline, as forecasts for mild weather across most of the US in early-December offset bullish US inventory data.

On the New York Mercantile Exchange, natural gas for delivery in January settled 6.22% lower on Friday at $4.084 per million British thermal units, having fallen to $4.079, the lowest since November 14th. The contract settled the week 7.6% lower, offsetting the previous weeks 7% gain.

The power-station fuel surged on Wednesday to the highest this week after the Energy Information Administration reported a larger-than-expected withdrawal in US gas stockpiles due to the previous weeks Arctic blast. However, the market reversed and settled the day lower, extending declines throughout the week, as weather models pointed to a mild start to December, implying significantly lower heating demand.

Data by the EIA showed that US natural gas stockpiles declined by 162 billion cubic feet in the seven days through November 21st. This exceeded analysts’ expectations for a draw of 150 billion cubic feet, while the five-year average decline for the period was 6 bcf.

Total gas held in US storage hubs slid to 3.432 trillion cubic feet, widening its deficit to the five-year average of 3.832 trillion to 10.4% from 6.4% during the previous week. Stockpiles were also 9.2% below year-ago levels of 3.778 trillion.

US weather

NatGasWeather.com reported on Friday that the Midwest and Northeast will remain dominated by below-normal temperatures during the weekend, but the southern part of the US would remain quite warm. Early next week, the low-demand north-central states will still be trapped under very cold air, but warm temperatures from the southern US will spread across the East, significantly reducing heating demand, followed by the return of seasonable readings across the central US as well.

Market players eyed developments between December 6th and 10th when cold patterns could develop, but mild weather is likely to return afterwards, if a strong Pacific jet stream enters the western US after December 10th.

NatGasWeather.com said in a Friday mid-day update: “The pattern after December 10th is quite tricky and will depend on how cold the weather systems from December 6-10th end up being, with milder weather patterns favored after as long as a strong Pacific jet stream is able to arrive into the western US and weather systems over the Midwest and Northeast dont trend too cold.”

Temperatures

According to AccuWeather.com, temperatures in New York on December 1st will range between 33 and 58 degrees Fahrenheit, above the average of 37-48, and will remain above-normal at 40-50 on December 7th. Chicago expects a very chilly Monday, with readings forecast to range between 20 and 22 degrees, below the normal 28-40, before rising to the above-usual 35-40 six days later.

Down South, Houston will reach 76 degrees tomorrow, 8 above normal, with readings expected to remain warmer than usual through December 8th. On the West Coast, the high in Los Angeles tomorrow will be 72 degrees, 3 above the average, and temperatures are expected to retain seasonal or little-above-seasonal levels until December 12th.

Pivot points

According to Binary Tribune’s daily analysis for Monday, January natural gas futures’ central pivot point stands at $4.177. In case the contract penetrates the first resistance level at $4.274 per million British thermal units, it will encounter next resistance at $4.465. If breached, upside movement may attempt to advance to $4.562 per mBtu.

If the energy source drops below its first support level at $3.986 per mBtu, it will next see support at $3.889. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.698 per mBtu.

In weekly terms, the central pivot point is at $4.231. The three key resistance levels are as follows: R1 – $4.382, R2 – $4.681, R3 – $4.832. The three key support levels are: S1 – $3.932, S2 – $3.781, S3 – $3.482.