Natural Gas Consolidates After Positive Week

Natural gas prices were little changed on Friday but hit resistance near a Fibonacci retracement of the decline in January and February.  Prices are up for the week after the National Oceanic Atmospheric Administration forecast warmer than normal weather which is expected to cover most of the United States for the next 8-14 days. There areas of the deep south in Texas are expected to be much warmer than normal, which should substantially increase cooling demand.  Support is seen near the 50-day moving average at 2.75. Momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Net injections top the 5-year average for the third week in a row

Net injections top the 5-year average for the third week in a row. Net injections into storage totaled 91 Bcf for the week ending May 18, compared with the five-year average net injections of 89 Bcf and last year’s net injections of 74 Bcf during the same week. Net injections during the week averaged 13.2 Bcf/day; net injections will have to average 13.1 Bcf/day for the remainder of the refill season to match the five-year average level (3,815 Bcf) by October 31. Working gas stocks totaled 1,629 Bcf, which is 499 Bcf lower than the five-year average and 804 Bcf lower than last year at this time. The deficit to the five-year average peaked at 534 Bcf earlier this year during the week ending April 20.

Supply rises

According to data from the EIA, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week, and average net imports from Canada increased by 3%.

Demand falls

According to data from the EIA, total U.S. consumption of natural gas fell by 1% compared with the previous report week. Natural gas consumed for power generation declined by 3% week over week. This overall decrease came despite an increase in cooling demand late in the report week, which affected spot prices. Industrial sector consumption stayed constant, averaging 19.9 Bcf/d. In the residential and commercial sectors, consumption declined by 1%. Natural gas exports to Mexico decreased 1%