Natural gas futures - Weekly outlook: July 1 - 5

Investing.com - Natural gas futures ended Friday’s session at the lowest level in nearly four months, as market players continued to focus on rising inventory levels amid an uncertain demand outlook.

On the New York Mercantile Exchange, natural gas futures for delivery in August fell 0.4% on Friday to settle the week at USD3.568 per million British thermal units.

Earlier in the day, Nymex gas prices fell to a session low of USD3.528 per million British thermal units, the weakest level since March 7.

On the week, natural gas prices sank 5.5%, the fifth consecutive weekly decline. For the quarter, natural gas declined 10.5%, as expectations for reduced demand weighed.

The commodity is now down nearly 20% from a recent peak of USD4.439 per million British thermal units hit on May 1, meeting the definition of a bear market.

Sentiment on the commodity remained downbeat following Thursday’s bearish U.S. supply report, which showed that natural gas storage in the U.S. rose by 95 billion cubic feet, above market expectations for an increase of 88 billion.

Inventories rose by 58 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 79 billion cubic feet.

The EIA has reported above-average injections in six of the past eight weeks, underlining the view that demand for the fuel is weakening.

Total U.S. natural gas storage stood 2.533 trillion cubic feet as of last week, just 1.2% below the five-year average for this time of year.

Early injection estimates for this week’s storage data range from 51 billion cubic feet to 75 billion cubic feet, compared to a 41 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 71 billion cubic feet.

Meanwhile, weather forecasting models pointed to mild weather across most of the Northeastern states next week.

Industry weather group MDA Weather Services said it expected near seasonal or below seasonal temperatures to spread across the eastern half of the nation during the next six-to-ten-days.

The U.S. Northeast is a key gas-cooling area. Mild summer temperatures reduce the need for gas-fired electricity to cool homes, dampening demand for natural gas.

Elsewhere in the energy complex, light sweet crude oil futures for August delivery settled at USD96.46 a barrel by close of trade on Friday, adding 2.65% on the week.

Meanwhile, heating oil for August delivery tacked on 0.6% over the week to settle at USD2.860 per gallon by close of trade Friday.