Natural gas futures prediction week july 9-13 2012

Natural gas futures prediction week july 9-13 2012 : Natural gas prices came under heavy selling pressure on Friday, as forecasts showing moderating temperatures following a recent heat wave prompted market players to lock in gains from a rally that took prices to the highest level since January. Concerns over reduced power demand from utilities and power generators also helped fuel the sell-off.

On the New York Mercantile Exchange, natural gas futures for delivery in August settled at USD2.787 per million British thermal units by close of trade on Friday. Earlier in the day, prices hit USD3.023, the highest since January 10.

On the week, the front-month natural gas contract declined 1.25%, the first weekly drop in four weeks.

A recent bout of hot weather across much of the country over the last several weeks helped boost natural gas prices. Spot prices have rallied nearly 25% in the past three weeks, as extreme heat conditions in the U.S. mid-Atlantic boosted demand for the fuel.

But futures plunged almost 5.5% Friday after updated weather forecasts showed moderating temperatures across most part of the country in the coming week.

Industry weather group MDA Federal said that it expected mostly seasonal temperatures across much of the central U.S. and Northeast for the period of July 11 through 15.

Weather service provider AccuWeather said that the high in Chicago on July 11 may be 81 degrees Fahrenheit (27 Celsius), four degrees below normal.

Below normal summer temperatures reduce the need for gas-fired electricity to power air conditioning, weighing on demand for natural gas.

Gas prices surged earlier in the session, shooting above the USD3.00-level for the first time since January after a report from the U.S. Energy Information Administration showed U.S. gas supplies rose less-than-expected last week.

The supply data came out a day later than usual due to the Fourth of July holiday.

The U.S. EIA said that natural gas storage in the U.S. rose by 39 billion cubic feet last week, below market expectations for an increase of 44 billion cubic feet.

Inventories rose by 90 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 79 billion cubic feet, according to U.S. Energy Department data.

Total U.S. gas supplies stood at 3.102 trillion cubic feet last week, 24.1% above last year's level and 22.7% above the five-year average level for that week.

U.S. gas inventories did not hit the milestone 3 trillion cubic feet level until August 31 of last year.

Market analysts have warned that without strong demand through the rest of the summer, gas inventories will reach the limits of available capacity later this year.

The storage surplus to last year will have to be cut by at least another 400 billion cubic feet in the 19 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity.

Prices also faced strong resistance once they broke above the USD3.00-mark, a level widely considered to be where gas loses its appeal over coal for power generation.

Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas helped boost prices off a 10-year low of USD1.902 hit in mid-April.

Natural gas prices are up nearly 35% since touching a decade-low on April 20.

Elsewhere in the energy complex, light sweet crude oil futures for August delivery traded at USD84.06 a barrel by close of trade on Friday, slumping 0.57% on the week.

Heating oil for August delivery eased up a modest 0.2% over the week to settle at USD2.706 per gallon by close of trade Friday.

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