Natural gas trading outlook: futures fall further on milder weather

Natural gas extended its losing streak to a fourth session amid forecasts for milder weather over most of the US.

Natural gas for delivery in January lost 0.62% to $3.982 per million British thermal units by 9:37 GMT. Prices held in a daily range between $4.026 and $3.973. The energy source settled 1.89% lower on Monday at $4.007, but not before it dropped to $3.928, its lowest since October 31.

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 9 – December 15 period.

Cold northern Canadian air flowing over the Plains, including northern Texas, will push overnight lows to around 10 degrees for one more day. However, temperatures will slowly moderate over the next several days as the cold system moves northward, bringing freezing air over the Great Lakes and New England, but leaving mild conditions behind.

A weak weather system will move through the eastern US today, pushing temperatures below readings from the past couple of days. By Wednesday, the southern US will enjoy quite warm weather, NatGasWeather.com reported, while the northern US will hit seasonal cool temperatures as weather systems move across it releasing rain and snow showers over some areas. Temperatures in the western US will be near normal due to a mild Pacific system, which has flown inland and is moving along side the California coast.

Early next week, weather systems will sweep through the Great Lakes and Northeast, bringing showers of rain and snow and slightly cooler than normal temperatures. As next week progresses, the major part of the US will enjoy mild temperatures thanks to a series of moist Pacific weather systems flowing through the country from west to east.

Supplies

Data by the EIA showed last week 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 2nd will range between 38 and 40 degrees, compared to the average of 36-48, before reaching the above-seasonal 38-52 on December 8th. Chicago will see readings of 27-34 degrees on December 3rd, before increasing to as much as 43 on December 7th, 5 above usual.

Down South, the high in Texas City on December 3rd will be 67 degrees, before increasing to as much as 71 degrees four days later, 6 degrees higher than normal. On the West Coast, today’s temperature in Los Angeles will peak at 65 degrees, 4 below usual, with temperatures set 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 $3.992. In case the contract penetrates the first resistance level at $4.056 per million British thermal units, it will encounter next resistance at $4.105. If breached, upside movement may attempt to advance to $4.169 per mBtu.

If the energy source drops below its first support level at $3.943 per mBtu, it will next see support at $3.879. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.830 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.