Natural gas prices dropped after data showed that U.S. natural gas supplies fell less than forecast last week, underlining concerns over weak demand. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended February 6 fell by 160 billion cubic feet, below expectations for a decline of 168 billion. Natural gas storage in the U.S. fell by 115 billion cubic feet in the preceding week. Inventories fell by 234 billion cubic feet in the same week a year earlier, while the five-year average change is a drop of 178 billion cubic feet. Total U.S. natural gas storage stood at 2.268 trillion cubic feet. Stocks were 542 billion cubic feet higher than last year at this time and 11 billion cubic feet below the five-year average of 2.279 trillion cubic feet for this time of year. A day earlier, natural gas surged 12.0 cents, or 4.48%, to settle at $2.797 after updated weather forecasting models pointed to frigid weather spanning from the Great Lakes-region to the Northeast through February 19. Bullish speculators are betting on the cold weather boosting winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption. Despite recent gains, natural gas prices are likely to remain vulnerable amid speculation supplies are more than ample to meet demand.
EIA projects that U.S. total natural gas consumption will increase to an average of 73.8 Bcf/d in 2015 and 74.8 Bcf/d in 2016, compared with an estimated 73.6 Bcf/d in 2014. Growth is largely driven by the industrial and electric power sectors, while residential and commercial consumption is projected to decline in 2015, and then remain flat in 2016. Natural gas consumption in the power sector is expected to average 23.0 Bcf/d in 2015, a 3.2% increase compared with 2014, and it is expected to grow by 1.8% to 23.4 Bcf/d in 2016. Industrial sector consumption increases by 4.5% and 2.1% in 2015 and 2016, respectively, as new industrial projects come online, particularly in the fertilizer and chemicals sectors.
Natural gas working inventories totaled 3,089 Bcf as of January 2, which is 250 Bcf greater than at the same time in 2014 and 67 Bcf lower than the previous five-year (2010-14) average. Following last year’s extremely cold winter, inventories fell 1,000 Bcf below the five-year average in mid-April. After a strong injection season, inventories were 237 Bcf below the five-year average on November 7. EIA projects that end-of-March 2015 inventories will total 1,665 Bcf, which is 9 Bcf greater than the five-year (2010-14) average.
Technically market is getting support at 156.20 and below same could see a test of 144.60 level, and resistance is now likely to be seen at 182.20, a move above could see prices testing 196.80.
HOLD/ADD SELL NAT GAS AT 170 AND ADD AT 175 SL ABV 182 TGT 162.50-154.
MCX SELL NATURAL GAS @ 166-168 SL ABV 182 TGT 160-154. MCX (Given on 02.02.2015)