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Natural gas futures - weekly outlook: October 20 - 24

Published 10/19/2014, 10:45 AM
Updated 10/19/2014, 10:45 AM
Natural gas futures fall 2.4% last week

Natural gas futures fall 2.4% last week

Investing.com - U.S. natural gas futures slumped to an 11-month low on Friday, as investors bet that mild weather will dampen early-winter demand for the heating fuel.

On the New York Mercantile Exchange, natural gas for delivery in November sank to a daily low of $3.715 per million British thermal units on Friday, a level not seen since November 21, 2013.

Prices came off the lows to settle at $3.766 by close of trade, down 3.0 cents, or 0.79%.

On the week, Nymex natural gas prices lost 9.3 cents, or 2.4%, the second straight weekly decline.

Futures were likely to find support at $3.659 per million British thermal units, the low from November 21, and resistance at $3.834, the high from October 16.

Updated weather-forecasting models showed that cold temperatures along the U.S. East Coast will give way to more seasonal readings from October 27 through October 31.

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

Meanwhile, investors continued to digest Thursday's weekly inventory data, which showed that natural gas storage in the U.S. rose by a more than expected 94 billion cubic feet last week.

Inventories rose by 79 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 78 billion cubic feet.

Injections of gas into storage have surpassed the five-year average for 26 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 3.299 trillion cubic feet as of last week, narrowing the deficit to the five-year average to 9.9% from a record 54.7% at the end of March.

The Energy Information Administration's next storage report is slated for release on Thursday, October 23, with analysts expecting a build in the range of 95 to 98 billion cubic feet for the week ending October 17.

The five-year average change for the week is an increase of 70 billion cubic feet.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in natural gas futures in the week ending October 14.

Net longs totaled 2,653 contracts as of last week, down from net longs of 6,288 in the previous week.

Elsewhere on the Nymex, crude oil for November delivery settled at $82.75 a barrel by close of trade on Friday, down $3.07, or 3.57%, on the week.

Meanwhile, heating oil for November delivery slumped 2.42% on the week to settle at $2.498 per gallon by close of trade Friday.

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