Natural gas prices are consolidating after getting hammered as prices have dropped approximately 43% since hitting 1-year highs at the end of January. The reversal has been extra-ordinary, despite robust demand and increasing exports.
Technicals
Natural gas prices are chopping around near support near the February 2017 and 2018 lows at 2.52. Resistance is seen near the 10-day moving average at 2.69. Negative momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the red, with an increasing trajectory which points to consolidation. The RSI (relative strength index) which is a momentum oscillator that measures accelerating and decelerating momentum, is moving sideways, which reflects consolidation. The RSI was unable to push into oversold territory, which means prices could trade in a zig-zag motion as trader’s await further inventory information.
Demand is up
Total U.S. consumption of natural gas rose by 13% compared with the previous report week. Natural gas consumed for power generation climbed by 9% week over week, and industrial sector consumption increased by 5%. In the residential and commercial sectors, consumption increased by 20%. Natural gas exports to Mexico were the same as last week, averaging 4.5 Bcf per day.
U.S. LNG exports increase week over week
Six LNG vessels which is LNG-carrying capacity 22.6 Bcf combined departed the Sabine Pass liquefaction facility from January 31 to February 7. One tanker of LNG-carrying capacity of 3.5 Bcf, was loading at the terminal on Wednesday.
Storage is on the lower End of the Range
Working gas deficit to the five-year average declines 32 Bcf. Net withdrawals from storage totaled 119 Bcf for the week ending February 2, compared with the five-year average net withdrawal of 151 Bcf and last year’s net withdrawal of 142 Bcf during the same report week. Working gas stocks totaled 2,078 Bcf, which is 393 Bcf less than the five-year average and 503 Bcf less than last year at this time. All regions in the Lower 48 states except for the Pacific region are lower than year-ago levels.