Natural Gas Bounces Slightly as Momentum Turns Negative

Natural gas prices rebounded slightly on Tuesday after dropping nearly 14% over the prior 2-trading session. The weather is colder than normal in the South and East Coast during the next 6-10 days. According to the National Oceanic Atmospheric Administration, the weather is warmer than normal throughout the mid-West and West over the next 8-14 days. Consumption fell last week across all sectors.

 Technical Analysis

Tuesday, natural gas prices edged higher, rising more than 1.3% following the prior week’s decline. Support is seen near the 200-day moving average at 4.20. Resistance is seen near the 10-day moving average at 4.63. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line.

Consumption Fell

U.S. natural gas consumption falls across all sectors this week. Total U.S. consumption of natural gas fell by 7.7% compared with the previous report week. Natural gas consumption in all sectors is lower this week, the largest decline being in the residential and commercial sectors, where consumption fell by 9.6%. Average temperatures, though below normal, rose relative to last week across the Lower 48 states.