Natural gas trading outlook: futures extend gains on EIA report, cold temperatures

Natural gas edged up for a second session on Friday after the Energy Information Administration reported a US storage withdrawal slightly above analysts’ forecasts.

Natural gas for delivery in February traded 1.91% higher at $2.983 per million British thermal units at 8:57 GMT, having shifted in a daily range of $2.990-$2.954. The energy source rose 1.95% on Thursday to $2.927.

According to NatGasWeather.com, US natural gas demand will be very high compared to normal through January 15th, but will become moderate-to-high, with a slightly warmer trend for the following seven days.

Another Arctic blast will flow into the Midwest and Northeast, bringing small snow accumulations. Temperatures over the majority of the central and eastern US will remain colder than usual on Saturday morning, when readings will fall to single digits and well below the zero mark.

The frigid weather will be primarily focused over the Midwest and Northeast. Meanwhile, readings in Texas and the Southeast will also stay below normal, with overnight lows reaching the teens.

Colder temperatures will persist over the Midwest and Northeast through Monday, when one last cold blast will hit the region, before it begins to rapidly thaw.

The western US will maintain its mild conditions due to high pressure dominating early next week as a wave of Pacific weather systems hit the region, NatGasWeather.com reported.

Late next week, a fast moving weather system is expected to depart from the Northeast, leaving behind periods of rain and snow. However, overall US temperatures will be lifted by arriving milder Pacific weather systems, which will travel across the country. Cold air is expected to remain trapped over the Canadian border and out of reach of US weather systems.

Temperatures

According to AccuWeather.com, temperatures in New York tomorrow will range between 16 and 22 degrees Fahrenheit, below the average of 27-38, before increasing to as much as 36 degrees on January 15th. Chicago will range between -3 and 4 degrees today, 27 beneath the normal, and will remain colder than usual through January 16th.

Down South, Houston will see readings range between 33 and 41 degrees today, compared to the average of 45-63, before temperatures reach seasonal levels on January 12th. On the West Coast, Los Angeles will range between 54 and 69 degrees tomorrow, compared to the usual 48-68, with readings projected to stay slight above normal through January 17th.

Supplies

The Energy Information Administration reported yesterday that US natural gas inventories slid by 131 billion cubic feet (bcf) during the week ended January 8th, compared to analysts’ projections for a drop of 121 bcf. However, this was still below the five-year average draw of 145 billion cubic feet.

Total gas held in US storage hubs amounted to 3.089 trillion cubic feet, narrowing the deficit to the five-year average of 3.156 trillion to 2.1% from 2.5% during the previous week. Stockpiles stood at 2.839 trillion cubic feet a year ago, 8.8% below current levels.

Pivot Points

According to Binary Tribune’s daily analysis, February natural gas futures’ central pivot point stands at $2.904. In case the contract penetrates the first resistance level at $2.991 per million British thermal units, it will encounter next resistance at $3.056. If breached, upside movement may attempt to advance to $3.143 per mBtu.

If the energy source drops below its first support level at $2.839 per mBtu, it will next see support at $2.752. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $2.687 per mBtu.