Natural gas futures - weekly outlook: December 15 - 19

Investing.com - U.S. natural gas futures rallied sharply to end at the highest level in more than a week on Friday, as investors reacted to cooler changes in near-term weather patterns.

On the New York Mercantile Exchange, natural gas for delivery in January surged 16.1 cents, or 4.43%, on Friday to settle at $3.795 per million British thermal units by close of trade.

Prices hit a session high of $3.826 earlier, the most since December 3.

Futures were likely to find support at $3.614 per million British thermal units, the low from December 11, and resistance at $3.866, the high from December 3.

Milder temperatures hovering over the U.S. should give way to colder temperatures by the end of December, which should prompt households and businesses to crank up their heating.

Below-average winter temperatures increase the need for gas-fired electricity to heat homes, boosting demand for natural gas.

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

Meanwhile, the U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. fell by 51 billion cubic feet last week, more than expectations for a decline of 45 billion and compared to a drop of 22 billion in the previous week.

Inventories fell by 92 billion cubic feet in the same week a year earlier, while the five-year average change is a drop of 72 billion cubic feet.

Total U.S. natural gas storage stood at 3.359 trillion cubic feet as of last week, 5.2% below year-ago levels and 9.4% below the five-year average for this time of year.

Despite Friday's gains, Nymex natural gas prices lost 0.7 cents, or 0.18%, on the week, as forecasts for milder temperatures to settle in across much of the U.S. in December weighed.

Natural gas prices are down almost 19% from a recent peak of $4.689 reached on November 21, as weather forecasts called for above-normal temperatures in the coming weeks.

Elsewhere on the Nymex, crude oil for January delivery settled at $57.81 a barrel by close of trade on Friday, down $8.03, or 12.19%, on the week.

Meanwhile, heating oil for January delivery slumped 4.05% on the week to settle at $2.098 per gallon by close of trade Friday.