Natural gas futures weekly recap, January 5 – January 9

Natural gas rose for a second day on Friday, trimming a weekly decline, after the Energy Information Administration reported a larger-than-expected inventory withdrawal last week and short-term forecasts called for colder weather. Gains, however, were capped as extended forecasts pointed to mild conditions across most of the US later in January.

On the New York Mercantile Exchange, natural gas for delivery in February rose 0.65% on Friday to settle the week ~1.8% lower at $2.946 per million British thermal units. Prices held in a weekly range of $3.176, touched on Monday, and Tuesdays low of $2.811.

The energy source registered solid gains on Thursday, paring overnight losses, after the EIA reported a larger-than-projected decline in US natural gas storage. Inventories slid by 131 billion cubic feet (bcf) during the week ended January 8th, compared to analysts’ projections for a drop of 121 bcf. Supplies declined by 191 billion cubic feet during the same week a year earlier.

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.

Inventories in the East Region fell by 65 billion cubic feet to 1.595 trillion and were 2.2% below the five-year average, while the West Region saw a net withdrawal of 33 bcf to 428 bcf, bringing supplies to 1.6% beneath average levels. Stockpiles in the Producing Region also slid by 33 bcf and amounted to 1.066 trillion, registering a deficit of 2.2% to the five-year average.

Short-term forecasts calling for frigid weather across high-consuming US states also offered some support, but extended forecasts pointed to milder conditions later in January, implying less heating demand.

Warmer weather

According to a NatGasWeather.com report dated January 9th, US natural gas demand will be very high compared to normal through January 15th, but will become moderate-to-high, with a slightly warmer weather trend for the following seven days.

Temperatures over the majority of the central and eastern US were expected to remain colder than usual during the weekend. 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, NatGasWeather.com reported, 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.

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, readings in New York on January 13th will range between 20 and 29 degrees, compared to the average 27-38, before jumping to the seasonal 30-37 degrees four days later. Chicago will experience a very chilly start to the week, with temperatures set to swing between 6 and 17 degrees on January 13th, below the normal of 18-31, before rising to the above-average 30-37 degrees on January 17th.

Down South, Houston will see colder-than-usual weather during the upcoming week, with readings expected to fall to 35-47 degrees on January 14th before recovering to normal levels at 52-63 degrees three days later. On the West Coast, Los Angeles will enjoy seasonal weather tomorrow as readings range between 50 and 68 degrees and will be slightly warmer than usual throughout the entire week.

Pivot points

According to Binary Tribune’s daily analysis for Monday, February natural gas futures’ central pivot point stands at $2.941. In case the contract penetrates the first resistance level at $2.995 per million British thermal units, it will encounter next resistance at $3.043. If breached, upside movement may attempt to advance to $3.097 per mBtu.

If the energy source drops below its first support level at $2.893 per mBtu, it will next see support at $2.839. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $2.791 per mBtu.

In weekly terms, the central pivot point is at $2.978. The three key resistance levels are as follows: R1 – $3.144, R2 – $3.343, R3 – $3.509. The three key support levels are: S1 – $2.779, S2 – $2.613, S3 – $2.414.