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Natural gas futures - weekly outlook: October 21 - 25

Published 10/20/2013, 10:38 AM
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Investing.com - Natural gas futures bounced back from a seven-day low to close modestly higher on Friday, as investors returned to the market to close out bets on lower prices after futures move into oversold territory.

Meanwhile, market participants continued to focus on weather forecasts to gauge the strength of demand for the fuel.

On the New York Mercantile Exchange, natural gas futures for delivery in November inched up 0.19% on Friday to settle the week at USD3.764 per million British thermal units.

Earlier in the day, Nymex gas prices tumbled by 1.9% to a session low of USD3.685, the weakest level since October 9. The November contract settled 0.32% lower on Thursday at USD3.757 per million British thermal units.

Nymex gas futures were likely to find support at USD3.673 per million British thermal units, the low from October 9 and resistance at USD3.868, the high from October 16 and the strongest level since June 21.

On the week, November natural gas prices lost 0.31%, the third weekly decline in four weeks.

Natural gas prices retreated after extended weather forecasting models pointed to above-average weather across most parts of the U.S. throughout most of November.

Bearish speculators are betting that the higher-than-normal temperatures will reduce early-winter demand for the heating fuel.

The heating season from November through March is the peak demand period for U.S. gas consumption.

Meanwhile, natural gas traders shifted some of their attention back to the resumption of government inventory data next week, which had been delayed due to the 16-day U.S. government shutdown.

The U.S. Energy Information Administration will publish it weekly natural gas supply report covering the week ended October 11 on Tuesday, October 22. The data will probably show that natural gas storage in the U.S. rose by 80 billion cubic feet.

Inventories increased by 54 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 75 billion cubic feet.

The agency’s data-release schedule will return to normal later in the week, with the publication of October 18 storage data due on Thursday, October 24.

Total U.S. natural gas storage stood at 3.577 trillion cubic feet as of October 4, 3.7% below last year's unusually high level but 1.6% above the five-year average for this time of year.

Elsewhere in the energy complex, light sweet crude oil futures for December delivery settled at USD101.11 a barrel by close of trade on Friday, dropping 0.4% on the week.

Meanwhile, heating oil for November delivery rose 0.13% on the week to settle at USD3.036 per gallon by close of trade Friday.

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