Natural gas trading outlook: futures extend losses after EIA report

Natural gas fell for a fourth session in five this week, despite forecasting agencies projections for a colder end of the year.

On the New York Mercantile Exchange, natural gas for delivery in January declined by 0.47% to $3.625 per million British thermal units by 10:05 GMT, having shifted in a daily range between $3.677 and $3.598 per mBtu, its lowest since December 8th. The energy source settled 1.62% lower at $3.642 on Thursday.

According to NatGasWeather.com, US natural gas demand will be moderate, compared to normal, through December 25th.

Modest to heavy rains are expected today over Texas, as a weather system gains strength over the region and moves through the Southeast this weekend. Excluding showers over the northwest and northeast corners, the northern US will be mainly quiet.

The start of next week will be marked by the development of a strong winter storm over the central and eastern US, NatGasWeather.com reported. As the week progresses, the storm will flow into the Northeast, bringing rain, snow and strong winds on Christmas Eve.

Temperatures over the Great Lakes and Northeast will reach sub-freezing levels as a strong winter storm winds down, but it will still manage to push colder temperatures far into the Southeast.

A scarier cold blast is expected to arrive in the northern US on January 1st, accompanied by very cold readings, which will ultimately boost heating demand. All in all, the majority of the US will be affected by lower-than-normal temperatures, excluding the southwest and far northeast.

Temperatures

According to AccuWeather.com, temperatures in New York on Saturday will range between 32 and 38 degrees Fahrenheit, compared to the average of 31-42, before climbing to 38-54 degrees on December 24th. Chicago will see readings of 30-34 degrees on December 20th, and is expected to remain mostly seasonal or a bit warmer through December 26th, with temperatures set to fall 10 degrees below normal through the end of the year.

Down South, Texas City will experience slightly colder-than-usual temperatures tomorrow, ranging between 51 and 58 degrees, before reaching 11 above normal on December 26th. On the West Coast, the high in Los Angeles on December 20th will be 66 degrees. Temperatures will fluctuate during next week, with readings of 80 degrees on December 23rd and 59 on December 28th.

Reserves

The Energy Information Administration said in a report that US natural gas stockpiles fell by 64 billion cubic feet (bcf) in the week ended December 12th, exceeding analysts’ projections for a withdrawal of 57-63 bcf but also falling well behind the five-year average drop of 157 bcf.

Total gas held in US storage hubs amounted to 3.295 trillion cubic feet as of December 12th, scoring a 0.2% surplus to last year’s level of 3.289 trillion during the comparable period, but also narrowing its deficit to the five-year average of 3.553 trillion to 7.3%.

Pivot Points

According to Binary Tribune’s daily analysis, January natural gas futures’ central pivot point stands at $3.694. In case the contract penetrates the first resistance level at $3.753 per million British thermal units, it will encounter next resistance at $3.863. If breached, upside movement may attempt to advance to $3.922 per mBtu.

If the energy source drops below its first support level at $3.584 per mBtu, it will next see support at $3.525. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.415 per mBtu.

In weekly terms, the central pivot point is at $3.735. The three key resistance levels are as follows: R1 – $3.885, R2 – $3.976, R3 – $4.126. The three key support levels are: S1 – $3.644, S2 – $3.494, S3 – $3.403.