Golden Investment Research (P) Limited
Natural gas to edge lower on weather concerns
Natural gas yesterday traded with the negative node and settled -2.01% down at 159.6 sharply trading close to a 28-month low as sentiment on the heating fuel was dampened after forecasts called for warmer-than-normal weather across the U.S. east coast in the coming week.
However, industry weather group MDA Federal said earlier that much of the northern US and East Coast were expected to be warmer-than-normal in the next six to ten days. Temperatures in the region were expected to be 5 to 14 degrees Fahrenheit above normal, before a cold front moves in to the area in mid-January. Natural Gas futures have closely tracked weather forecasts in recent weeks.
Below-normal winter temperatures increase the need for gas-fired Electricity to heat homes, boosting demand for natural gas. Concerns over elevated inventory levels in the U.S. also added to selling pressure. Gas futures typically climb during the winter months, as temperatures fall and demand for heating fueled by Natural Gas rises.
But mild winter weather coupled with high inventory and production levels in the US have kept prices depressed near 28-month lows in recent weeks. For today's session market is looking to take support at 157.5, a break below could see a test of 155.5 and where as resistance is now likely to be seen at 161.9, a move above could see prices testing 164.3.
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