Natural Gas Price Analysis for February 28, 2018

Natural gas prices rebounded again on Tuesday and continues to consolidate above support following the recent tumble in prices. This comes as reported withdrawals out of storage were higher than the median of analysts’ expectations. Demand has been subdued but it might pick up as colder than normal weather is expected to cover most of the United States over the next 8-14 days.

Technicals

Natural gas prices are consolidating above support near an upward sloping trend line at 2.55. Additional support is seen near the 10-day moving average at 2.604. Resistance is seen near the 2.70 level. Momentum is turning positive as the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Temperatures Were Higher than Normal

During the latter half of February temperatures were higher than normal during the storage week throughout most of the Lower 48 states. Temperatures in the Lower 48 states averaged 39 degrees Fahrenheit, 3°F higher than the normal, 3°F lower than last year at this time, and 5°F above the average temperature of the prior storage week.

Durable Goods Order Were Soft

The Commerce Department reported that Durable Goods orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2% last month after declining 0.6% in December. That was the first back-to-back drop in these so-called core capital goods orders since May 2016. Economists polled had forecast these orders rising 0.5% last month. Orders increased 8.0% on a year-on-year basis.

Shipments of core capital goods edged up 0.1% after an upwardly revised 0.7% rise in December. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement. They were previously reported to have increased 0.4% in December.