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Natural gas futures - weekly outlook: December 9 - 13

CommoditiesDec 08, 2013 10:51AM ET
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This article has already been saved in your Saved Items - Natural gas futures rallied to a six-month high on Friday, before turning modestly lower as investors cashed out of the market to lock in gains.

Prices remained supported as updated weather forecasting models continued to point to freezing temperatures across most parts of the U.S.

On the New York Mercantile Exchange, natural gas futures for delivery in January shed 0.44% on Friday to settle the week at USD4.114 per million British thermal units.

Nymex gas prices rallied to a session high of USD4.199 per million British thermal units earlier, the strongest level since May 29.

The January contract surged 4.34% on Thursday to settle at USD4.132 per million British thermal units on the back of a bigger-than-expected drawdown in weekly U.S. natural gas supplies.

Natural gas futures were likely to find support at USD3.951 per million British thermal units, the low from December 5 and resistance at USD4.199, the high from December 6.

On the week, January natural gas prices rose 3.88%, the fifth consecutive weekly gain, as bullish speculators bet that colder weather will increase demand for the heating fuel.

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

Updated weather forecasting models called for severe cold weather across most parts of the U.S. during the next three-to-five days, with continued cold across most of the nation expected in the next six- to-ten days.

Prices rallied sharply on Thursday after the Energy Information Administration said that natural gas storage in the U.S. fell by 162 billion cubic feet last week, outstripping expectations for a withdrawal of 138 billion cubic feet.

Inventories fell by 62 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 41 billion cubic feet.

Total U.S. natural gas storage stood at 3.614 trillion cubic feet as last week, more than 5% below last year's unusually high level and nearly 3% below the five-year average for this time of year.

Early estimates for next week’s storage data range from a draw of 75 billion cubic feet to 86 billion cubic feet, compared to a drop of 8 billion cubic feet during the same week a year earlier.

The five-year average change for the week is a decline of 76 billion cubic feet.

Elsewhere in the energy complex, light sweet crude oil futures for January delivery settled at USD97.65 a barrel by close of trade on Friday, up 5.04% on the week.

Meanwhile, heating oil for January delivery advanced 0.91% on the week to settle at USD3.060 per gallon by close of trade Friday.

Natural gas futures - weekly outlook: December 9 - 13

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