Natural gas futures weekly recap, December 15 – December 19

Natural gas slid in four out of five trading sessions this week and registered a sizable weekly drop as short-term weather forecasts pointed to mostly seasonal readings across the US through the weekend.

Natural gas for delivery in January plunged 4.89% on Friday to settle the week 8.9% lower at $3.464 per million British thermal units. Prices ranged between a weekly high of $3.936 touched on Monday, the highest since December 2nd, and Fridays 13-1/2-month low of $3.444.

Weather patterns during the weekend were expected to present no significant changes compared to previous projections, NatGasWeather.com said in a Friday mid-day update, with no regions of the US set to experience more than several degrees cooler than average readings.

However, a weather system moving on Monday into the northern Plains and then pushing colder temperatures deep into the central US will aid the development of a strong storm that will track across the country December 23rd and 24th with increasing rain, snow, and strong winds. It will only tap a modest amount of cold air, but will be followed by more severe blasts.

“Immediately after, much colder air will begin sweeping through the north-central US with sub-freezing temperatures, which will cover much of the northern half of the US by December 28th” NatGasWeather.com said. “The latest data continues to show very cold air over the northern US going into the New Year and potentially through the first week of January. So while the markets continue to sell off, weather patterns are still looking much colder after a fairly strong Christmas Eve storm plays out.”

Temperatures

According to AccuWeather.com, readings in New York will range on December 23rd between 49 and 50 degrees Fahrenheit, above the average 30-41, before dropping to seasonal and a bit lower starting December 28th. Chicago will also enjoy warmer-than-usual weather through the holidays, with temperatures ranging between 31 and 40 degrees on December 24th, but will slide to 20-27 degrees on December 28th, compared to the 20-32 average.

Down South, Houston will enjoy seasonal weather on December 23rd, with temperatures peaking at 63 degrees, and is expected to keep at normal or slightly-below-normal levels through December 30th. On the West Coast, readings in Los Angeles on Tuesday will peak at 78 degrees, 11 above usual, and will remain average or slightly warmer through the end of the year.

Supplies

The Energy Information Administration said in a report on Thursday 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 for Monday, January natural gas futures’ central pivot point stands at $3.528. In case the contract penetrates the first resistance level at $3.613 per million British thermal units, it will encounter next resistance at $3.761. If breached, upside movement may attempt to advance to $3.846 per mBtu.

If the energy source drops below its first support level at $3.380 per mBtu, it will next see support at $3.295. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.147 per mBtu.

In weekly terms, the central pivot point is at $3.615. The three key resistance levels are as follows: R1 – $3.785, R2 – $4.107, R3 – $4.277. The three key support levels are: S1 – $3.293, S2 – $3.123, S3 – $2.801.