Natural gas trading outlook: futures extend fall on above-normal temperatures

Natural gas slid for a sixth consecutive session and reached a new low as forecasts project milder weather over the majority of the US, with brief cold interruptions.

Natural gas for delivery in January lost 0.60% to $3.782 per million British thermal units by 9:25 GMT. Prices held in a daily range between $3.808 and $3.759. The energy source dropped 1.78% on Wednesday to $3.805, but not before falling to $3.757, the lowest since October 30.

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 11 – December 17 period.

One last cold Canadian blast will affect the Great Lakes and New England by Friday, before temperatures reach above-normal levels with only small areas of the regions left behind with colder readings.

Over the weekend the majority of the US will enjoy slightly warmer than usual temperatures, NatGasWeather.com reported, reaching highs of 60s and 70s across the southern half of the US. Heavy rains and high levels of snow will be seen in the western US as weather systems are passing through. However, overall temperatures will become quite mild during the Friday-Monday period.

Starting next Monday, colder weather systems are expected to arrive in the Midwest and Northeast with sub-freezing temperatures. Around mid-December moist Pacific weather systems will move across the country every few days, with periods of rain and snow and normal or above normal temperatures as the very cold Canadian air remains outside the US.

Temperatures

According to AccuWeather.com, temperatures in New York on December 4th will range between 34 and 42 degrees, slightly below the average of 36-47, before reaching the above-seasonal 45-50 on December 13th. Chicago will see readings of 33-37 degrees on December 5th, before overtaking normal temperatures by 7 to reach 43 degrees on December 11th.

Down South, the high in Texas City on December 5th will be 72 degrees, 6 above usual, before sliding to 52-60 degrees on December 11th. On the West Coast, today’s temperature in Los Angeles will peak at seasonal 69 degrees, before temperatures jump to 72-76 degrees between December 7th and December 11th.

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.

According to NatGasWeather.com, today’s report is projected to show a decline in reserves by 30 bcf. However, there is a wide range of estimates, some as high as 50 bcf, which would be in line with the five-year average. Last year stockpiles dropped 141 bcf during the comparable period.

Pivot Points

According to Binary Tribune’s daily analysis, January natural gas futures’ central pivot point stands at $3.809. In case the contract penetrates the first resistance level at $3.862 per million British thermal units, it will encounter next resistance at $3.918. If breached, upside movement may attempt to advance to $3.971 per mBtu.

If the energy source drops below its first support level at $3.753 per mBtu, it will next see support at $3.700. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.644 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.