This article was originally published on BinaryTribune.com

Natural Gas - Futures Trading

Natural gas kept gaining ground last week and extended its march on Monday as forecasts warned about sub-freezing temperatures across the Midwest and Northeast.

On the New York Mercantile Exchange, natural gas for delivery in December gained 4.70% to $4.055 per million British thermal units by 10:26 GMT. Prices ranged between $4.065, the highest in a month, and $4.007. The contract edged up 1.20% on Friday to $3.873 per mBtu, and settled the week 4.73% higher, its biggest gain since mid-February.

According to NatGasWeather.com, natural gas demand in the US over the next seven days will be moderate, compared to normal, with a slightly colder weather trend for the seven days between November 10-16.

High pressure and mild temperatures will return to the eastern US, after a weekend of lows in the 20s and 30s. However, the gentle temperatures will not last long as chilly Canadian weather systems will arrive late this week.

Texas will be affected by strong thunderstorms and slightly cooler temperatures. Clashes between colder Canadian air and milder U.S. air over the Midwest and Northeast will result in periods of sub-freezing temperatures with warmer air in between. North-central and northeastern regions may reach into the low 20s.

Overall milder-temperature periods will reign over most of the U.S. with chilly weather at times. The high-demand states of Texas and Oklahoma will remain mostly mild but incoming northern cool blasts will still keep heating demand at considerable levels over the next 10 days.

Temperatures

According to AccuWeather.com, readings in New York on November 6th will range between 49 and 60 degrees Fahrenheit, above the average of 44-57, before sliding back to 42-54 degrees three days later. Chicago will drop to 37 degrees on November 6th, 2 below usual, and will range between 22-37 degrees on November 13th.

Down South, temperatures in Houston will max out at 81 degrees on November 4th, 5 above normal, before falling to the seasonal 74 degrees on November 11th. On the West Coast, the high in Los Angeles on November 5th will be 88 degrees, 13 higher than normal, before dropping to as much as 73-74 degrees on November 10-11.

Supplies

The Energy Information Administration reported on Thursday that US natural gas inventories rose by 87 billion cubic feet in the week ended October 24th, sharply exceeding the five-year average increase of 59 bcf and the 45-bcf gain during the comparable period a year ago. Analysts had projected an 85-bcf jump. Nevertheless, the market rallied on weather data.

Total gas held in US storage stood at 3.480 trillion cubic feet, narrowing the deficit to the five-year average to 8.2%, compared to 9.1% a week earlier. Inventories were 7.8% below the 3.774 trillion cubic feet of gas held in storage a year ago.

The EIA is expected to report a build of around 90 bcf this Thursday, which would outstrip the 5-year average gain by almost 30 bcf. If confirmed, this would be seen as quite bearish. Support is expected to be drawn by weather data.

Pivot points

According to Binary Tribune’s daily analysis, December natural gas futures’ central pivot point stands at $3.888. In case the contract penetrates the first resistance level at $3.940 per million British thermal units, it will encounter next resistance at $4.008. If breached, upside movement may attempt to advance to $4.060 per mBtu.

If the energy source drops below its first support level at $3.820 per mBtu, it will next see support at $3.768. If the second key support zone is breached, the power-station fuel’s downward movement may extend to $3.700 per mBtu.

In weekly terms, the central pivot point is at $3.816. The three key resistance levels are as follows: R1 – $4.012, R2 – $4.151, R3 – $4.347. The three key support levels are: S1 – $3.677, S2 – $3.481, S3 – $3.342.

Gary Beal