MTECHTIPS:-Natural gas futures – weekly outlook: June 29 – July 3
Natural gas futures fell sharply on Friday, as forecasts for mild weather across the U.S. in the weeks ahead dampened demand expectations for the fuel. Updated weather forecasting models called for mostly average temperatures across most parts of the U.S. in the next two weeks. Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Natural gas accounts for about a quarter of U.S. electricity generation. On the New York Mercantile Exchange, natural gas for delivery in August tumbled 9.6 cents, or 3.35%, to close at $2.770 per million British thermal units. For the week, the August natural gas contract lost 7.0 cents, or 2.46%, the first weekly decline in three weeks. Futures were likely to find support at $2.733, the low from June 24, and resistance at $2.789, the high from June 25. On Thursday, natural gas prices jumped 8.4 cents, or 3.02%, to end at $2.866 after data showed that U.S. natural gas supplies rose by the least in two months last week. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 75 billion cubic feet, compared to expectations for an increase of 77 billion and following a build of 89 billion cubic feet in the preceding week. Supplies rose by 110 billion cubic feet in the same week last year, while the five-year average change is an increase of 86 billion cubic feet. Total U.S. natural gas storage stood at 2.508 trillion cubic feet as of last week, 38.3% higher than during the same week a year earlier and 1.4% above the five-year average for this time of year. Last spring, supplies were 55% below the five-year average, indicating producers have made up for all of last winter’s unusually strong demand. The EIA’s next storage report slated for release on Thursday, July 2 is expected to show a build of approximately 70 billion cubic feet for the week ending June 26. Supplies rose by 102 billion cubic feet in the same week last year, while the five-year average change is an increase of 75 billion cubic feet.