Natural gas trading outlook: futures extend losses on milder temperatures

Natural gas fell for a third consecutive day, reaching its lowest price in more than two weeks, as forecasts for milder temperatures over the southern and eastern US increased speculations of easing heating demand.

Natural gas for delivery in January lost 2.99% to $3.962 per million British thermal units by 11:18 GMT. Prices held in a daily range between $4.019 and $3.947, its lowest since November 14. The energy source settled 6.22% lower on Friday at $4.084, losing 7.6% for the week.

According to NatGasWeather.com, natural gas demand in the US over the next seven days will be moderate, compared to normal, with a slightly warmer trend for the December 6 – December 13 period.

Early this week the southern and eastern US will enjoy milder temperatures as high pressure builds up into the region. The Plains will be affected by cold northern Canadian air sweeping through, pushing overnight lows below 10 degrees.

The warmer-than-usual weather will stay over the southern half of the US into next week, while temperatures in the northern US will cool down do seasonal readings by Wednesday as weather systems moving across the region bring areas of rain and snow.

In the western US, excluding the Northwest, above normal temperatures will reign over the area as mild Pacific systems track inland along the coast.

Starting next week, weather systems with rain and snow will move across the Great Lakes and Northeast bringing slightly colder than normal temperatures.

However, as the week progresses the majority of the US will experience milder temperatures thanks to a moist Pacific weather system flowing through the country from west to east.

Supplies

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.

Temperatures

According to AccuWeather.com, temperatures in New York on December 1st will range between 34 and 60 degrees, compared to the average of 37-48, before reaching 42-50 on December 6th. Chicago will see readings of 29-34 degrees on December 2nd, before increasing to as much as 43 on December 6th, 5 above the seasonal.

Down South, the high in Texas City on December 2nd will be 60 degrees, 6 below normal, before increasing to as much as 73 degrees on December 6th. On the West Coast, today’s temperature in Los Angeles will peak at 72 degrees, 3 above usual, with temperatures to range between 70-74 degrees between December 5 and December 10.

Pivot Points

According to Binary Tribune’s daily analysis, 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.