Natural Gas Price Analysis for March 15, 2018

Natural gas prices reversed course on Wednesday ahead of Thursday inventory report from the Department of Energy. This comes despite a forecast from the National Oceanic Atmospheric Administration that shows that the weather will be cooler than normal over the next 8-14 days, lifting natural gas demand.  Demand for distillates which are generally driven by heating demand dropped according to the EIA’s demand report on petroleum products.

Technicals

Natural gas prices reversed lower, dropping through support near the 10-day moving average which is seen near 2.74.  Additional support is seen near an upward sloping trend line that comes in near 2.64. Momentum has turned negative as the fast stochastic has generated a crossover sell signal in overbought territory which points to lower prices. Positive momentum as reflected by the MACD is declining as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation.

Distillate Demand Slips but Product Demand is Strong

Demand for product remains robust, but surprisingly there was a decline in distillate demand. Total product demand over the last month averaged 20.4 million barrels per day, up by 3.2% from the same period last year. Over the last month, gasoline demand averaged 9.2 million barrels per day, up by 2.5% from the same period last year. Distillate fuel demand averaged 4.0 million barrels per day over the last four weeks, down by 4.2% from the same period last year.

China’s industrial production increased at a faster-than-expected pace

China’s industrial production increased at a faster-than-expected pace in the first two months of the year, official data from the National Bureau of Statistics showed Wednesday. Industrial output climbed 7.2% in the January to February period from a year ago, faster than the 6.2% rise in December. That was also above the 6.6% increase economists had forecast. During the first two months of 2018, retail sales surged 9.7% as compared to the same period of last year. In December, the rate of growth was 9.4%. That was slightly slower than the expected growth of 10.0%. The statistical office also revealed that fixed asset investment grew 7.9% annually in the January to February period. It was forecast to increase by 7.0%.