Natural gas futures weekly recap: March 2 – March 6

Natural gas was little changed on Friday and registered a third weekly jump in four after data by the EIA showed an expansion in US inventory deficits last week.

Natural gas for delivery in April fell 0.07% on Friday to settle the week 3.8% higher at $2.839 per million British thermal units. The contract swung in a weekly range between Fridays one-week high of $2.870 and Tuesdays three-week low of $2.641 per mBtu.

The Energy Information Administration reported on Thursday that US natural gas stockpiles fell by 228 billion cubic feet in the seven days through February 27th, in line with analysts’ expectations for a decline in the range of 222-235 bcf. This compared to the five-year average withdrawal of 115 bcf and the year-ago drop of 144 bcf.

Total gas held in US storage hubs amounted to 1.710 trillion cubic feet last week, expanding a deficit to the five-year average inventory level of 1.853 trillion to 7.7%, or -143 bcf, from 1.5% a week earlier. Stockpiles stood at 1.218 trillion cubic feet during the comparable period a year ago, 40.4% below current levels.

Upside movement fueled by the bullish supply report, however, was limited amid weather forecasts showing a widespread thaw in the US starting this weekend.

NatGasWeather.com reported on Friday that natural gas demand in the US will be moderate compared to normal through March 12th, with a neutral weather trend for the following seven days.

Warmer temperatures will spread out of the West and into the central and southern US through the weekend, a mid-day update showed, resulting in near or warmer-than-usual readings. Conditions across the Great Lakes and Northeast will also see moderation early next week as temperatures rise well above the freezing point, with highs set to reach the upper 40s and lower 50s Fahrenheit.

A weather system with below-freezing temperatures tracking across southern Canada will hit the Great Lakes and Northeast late Thursday into Friday, with the latter region feeling the strongest impact, driving strong local heating demand for several days. A weather system developing late this weekend across Texas and the South will prevent temperatures from rising too high and will late next week merge with cooler air spilling down the Plains and cover many eastern regions, keeping readings near seasonal.

“Thereafter, the weather data is at odds on whether additional cold blasts will follow into the northern US March 16-20th, and also how successful Pacific weather systems will be crashing into the West Coast,” NatGasWeather.com said. “We still expect there will be a little bit of both, and this will likely lead to fairly seasonal temperatures over much of the US.”

Next Thursday’s EIA inventory report will show another withdrawal well above the average as this past week’s Arctic outbreak is factored in, bringing deficits to around -200 bcf. The five-year average inventory decline for the week ending March 6th is 116 billion cubic feet, while stockpiles fell by 189 bcf a year ago.

This weekend and next week’s thaw will end the recent string of hefty inventory declines, causing a much thinner withdrawal for the March 19th report. That decline will likely still be above the average as cool conditions across the North induce enough heating demand, while average withdrawals drop steeply as the winter draws to an end. The five-year average draw for the week ending March 13th is 45 bcf, while stockpiles slid by 69 bcf a year ago.

Temperatures

According to AccuWeather.com, readings in New York will range between 34 and 50 degrees tomorrow, compared to the average 33-47, and are expected to remain near or slightly cooler than seasonal for the entire month. Chicago will be near-normal on March 9th as readings range between 32 and 42 degrees, before peaking at 49 degrees three days later, 4 above usual.

Down South, Houston will experience cooler-than-normal weather through March 11th as highs range between 57 and 67 degrees, compared to the average 71, before establishing in the 70s through March 21st. On the West Coast, the high in Los Angeles tomorrow will be 82 degrees Fahrenheit, 12 higher than usual, with the mercury set to peak in the lower to mid 80s for the next 10 days.

Pivot points

According to Binary Tribune’s daily analysis for Monday, April natural gas futures’ central pivot point stands at $2.831. In case the contract penetrates the first resistance level at $2.878 per million British thermal units, it will encounter next resistance $2.918. If breached, upside movement may attempt to advance to $2.965 per mBtu.

If the energy source drops below its first support level at $2.791 per mBtu, it will next see support at $2.744. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $2.704 per mBtu.

In weekly terms, the central pivot point is at $2.783. The three key resistance levels are as follows: R1 – $2.926, R2 – $3.012, R3 – $3.155. The three key support levels are: S1 – $2.697, S2 – $2.554, S3 – $2.468.