Natural Gas Drops as Cool Weather Weighs on Demand

Natural gas prices moved lower dropping by 1.37% on Tuesday as net invections remain on the lower end of the range but the weather shows cooler than normal temperatures. Prices broke through support near the 10-day moving average which is now seen as resistance at 2.92. Support is seen near an upward sloping trend line at 2.87. Momentum is neutral to negative as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory.

Reported net injections into storage are on the low end of analysts’ expectations. Estimates of the weekly net change from working natural gas storage ranged from net injections of 96 Bcf to 107 Bcf, with a median estimate of 102 Bcf. Temperatures are in the normal range for the storage week. Temperatures in the Lower 48 states averaged 66 degrees Fahrenheit 2°F higher than normal and 1°F higher than last year at this time.

Canada labor productivity fell

Canada labor productivity fell 0.3% in Q1 after the 0.2% gain in Q4. Hours worked climbed 0.5% in Q1 after the 0.2% increase in Q4. GDP slowed to a 0.2% pace in Q1 from the 0.4% rate of increase in Q4. Unit labor costs moderated to a still firm 0.7% growth rate in Q1 after posting back to back 1.3% gains in Q3 and Q4. While the decline in Q1 productivity was more pronounced than expected, the report is broadly as expected, with a contraction in productivity as hours worked accelerated and GDP slowed, while unit labor costs slowed from the relatively lofty growth rates in the second half of last year to a still strong pace in Q1 as the underlying labor market conditions continue to tighten.

U.S. NABE 2018 Economic Outlook survey was generally upbeat

U.S. NABE 2018 Economic Outlook survey was generally upbeat on the economy through 2019. However, respondents were “slightly less optimistic” on the economy this year than they were in the prior survey three months ago, in part due to trade policies. Average annual GDP growth for 2018 is projected at 2.8%, down fractionally from 2.9% previously, though it’s still up considerably from the 2.5% pace projected in the December survey. Fiscal stimulus is seen as supportive and is expected to increase growth by about 0.4% this year and 0.3% in 2019. But NABE warned that 57% of respondents see 2018 growth risks are weighted to the downside, with 71% seeing inflation risks weighted to the upside. Some 73% see the current trade policies as having a negative effect on growth.