Natural Gas Drops and Finishes the Week in the Red

Natural gas tumbled on Friday, dropping 6% and ending the week in the red. The weather is expected to be much colder than normal in the South, mid-West, and East Coast during the next 8-14 days. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal throughout the mid-West and West over the next 6-10 days and colder than normal in the South. Supplies of natural gas were flat week over week.

 Technical Analysis

On Friday, natural gas prices dropped testing support near an upward sloping trend line that comes in near 4.58. Additional support is seen near the 10-day moving average at 4.54. Resistance is seen near the December highs at 5.51. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is positive and decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

Natural Gas Supplies were Flat

U.S. natural gas supply is relatively flat this week. According to data from the EIA, the average total supply of natural gas rose this week by 0.1% compared with the previous report week. Dry natural gas production grew by 0.7% and was largely offset by lower net imports from Canada, which decreased by 6.0%  from last week.