Natural gas fell on Monday, extending declines to a third day, on projections of milder weather over the eastern US and the West Coast during the week.
On the New York Mercantile Exchange, natural gas for delivery in January declined by 3.93% to $3.328 per million British thermal units by 8:43 GMT, having shifted in a daily range between $3.351 and $3.301 per mBtu, its lowest since August 15th, 2013. The energy source dropped 4.89% at $3.464 on Friday and settled the week 8.72% lower.
According to NatGasWeather.com, US natural gas demand will be moderate compared to normal over the next seven days.
The eastern US will maintain its mild state early this week, with fewer rains over the region. Meanwhile, a strong weather system will start to form over the central US, leading the way for colder temperatures. Readings may reach lows of 20s and 30s over the northern districts of Texas.
Conditions over the West Coast will also remain quite mild, with projections of high snow levels and heavy rains. The weather system over the central US will move into the eastern US on Christmas Eve with areas of rain, strong winds and snow.
A very cold blast is expected to hit the majority of the central and the eastern US late this week. Freezing temperatures will affect many high natural gas use regions during the first week of January and thus significantly boost heating demand.
All in all, the majority of the US will be affected by lower-than-normal temperatures, excluding the southwest.
Temperatures
According to AccuWeather.com, temperatures in New York on Monday will range between 41 and 43 degrees Fahrenheit, compared to the average of 30-41, before climbing to 32-47 degrees on December 27th. Chicago will see readings of 34-45 degrees on December 23rd, and is expected to remain mostly seasonal or a bit warmer through December 26th, with temperatures set to fall 8 degrees below normal on December 31st.
Down South, Texas City will experience colder-than-usual temperatures on December 24th, ranging between 42 and 54 degrees, before reaching 7 above normal on December 26th. On the West Coast, the high in Los Angeles on December 23rd will be 10 above the normal at 77 degrees. Temperatures will fluctuate through the end of December, with readings of 75 degrees on 24th and 66 on 29th.
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 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.
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