Natural gas futures weekly recap: March 9 – March 13

Natural gas settled the week lower as streaming weather data continued to show seasonal readings across the majority of the US throughout next week, keeping heating demand much lower compared to recent weeks as we near the end of the withdrawal season.

Natural gas for delivery in April slid 0.26% on Friday to settle the week 3.7% lower at $2.727 per million British thermal units. The contract shifted in a weekly range between Thursdays one-week high of $2.864 and Wednesdays one-week low of $2.662.

A much larger than average inventory withdrawal last week provided some support but upside movement was capped as the draw came in line with already priced-in expectations, while seasonal and slightly warmer temperatures across the US curbed heating demand.

The Energy Information Administration reported on Thursday that US natural gas stockpiles fell by 198 billion cubic feet in the seven days through March 6th, compared to analysts’ median estimate of -191 bcf and was in the upper limit of the expectations range. This was well above the five-year average withdrawal for the week of 116 billion cubic feet, while stockpiles slid by 189 bcf a year ago.

Total gas held in US storage hubs amounted to 1.512 trillion cubic feet, expanding a deficit to the five-year average of 1.737 trillion to 13.0%, or 225 bcf, from 7.7% a week earlier. Inventories stood at 1.029 trillion a year ago, 46.9% below current levels.

According to a Friday report by NatGasWeather.com, natural gas demand in the US will be low-to-moderate compared to normal through March 26th, with a neutral-to-slightly-warmer weather trend for the following seven days.

A weather system that had brought showers across the south and central-east US has reached the Northeast, bringing rain and snow on Saturday, while colder Canadian air filters into the system over the Great Lakes and Northeast. The rest of the US remains engulfed by seasonal and warmer temperatures, with widespread highs into the upper 60s and 70s set to last through next week.

A cold blast on Tuesday and Wednesday will hit the northern regions of the country, but will likely fail to impress over the Midwest, NatGasWeather.com said in a Friday mid-day update, keeping heating demand from spiking. The cold fronts main area of impact will be the Northeast as it pushes overnight lows into the teens and lower 20s, but its reach will be limited, keeping most high-population cities out of harms way.

A more impressive cold blast will impact larger parts of the North late in the week, which may be followed by a series of subsequent blasts after March 23-24th that could spur higher heating demand. If that pattern fails to evolve, heating demand may be drawing close to an end for the season.

Next week’s inventory report by the Energy Information Administration is expected to show a near-average withdrawal as last weekend and this past week’s widespread thaw is accounted for, especially as the cold Canadian front that has hit the far Northeast fails to push deeper. The five-year average draw for the week ending March 13th is 45 bcf, while stockpiles slid by 69 bcf a year ago.

The report after, due on March 26th, will also likely reflect a near-average withdrawal as the majority of the US enjoys mostly seasonal weather this weekend and next week, while the cold front expected to arrive over the North on Tuesday and Wednesday probably fails to impress. The five-year average withdrawal for the week ended March 20th is 19 billion cubic feet, while the year-ago storage drop was 56 bcf.

Temperatures

According to AccuWeather.com, the high in New York on March 16th will be 56 degrees Fahrenheit, 6 above usual, but will then ease to the mid-upper 40s for the following six days. Chicago will see temperatures range between 48 and 58 degrees on Monday, compared to the average 31-47, before highs drop in the 40s through March 27th.

Down South, Houston will enjoy warmer-than-seasonal weather over next week, with temperatures set to max out at 73-76 degrees, compared to the average 73. On the West Coast, the mercury in Los Angeles will peak at 92-93 degrees this weekend, 22-23 above usual, before easing to the upper 70s and lower 80s through March 27th.

Pivot points

According to Binary Tribune’s daily analysis for Monday, April natural gas futures’ central pivot point stands at $2.720. In case the contract penetrates the first resistance level at $2.766 per million British thermal units, it will encounter next resistance at $2.805. If breached, upside movement may attempt to advance to $2.851 per mBtu.

If the energy source drops below its first support level at $2.681 per mBtu, it will next see support at $2.635. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $2.596 per mBtu.

In weekly terms, the central pivot point is at $2.751. The three key resistance levels are as follows: R1 – $2.840, R2 – $2.953, R3 – $3.042. The three key support levels are: S1 – $2.638, S2 – $2.549, S3 – $2.436.