Natural Gas Price Analysis for March 26, 2018

Natural gas prices fell for the third straight day after breaking down through support levels on Thursday following a smaller than expected decline in natural gas inventories reported by the EIA.  Demand fell last week as the residential and commercial sectors saw a 9% drop due to warming temperatures. A stronger than expected U.S. Durable Goods Orders failed to buoy prices.

Technicals

Natural gas prices continued to move lower following a break down through trend line support that is driving prices toward target support near 2.52. Resistance is now former support at 2.65 and then the 10-day moving average at 2.68. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Demand falls in Latest Week

Total U.S. consumption of natural gas fell by 5% compared with the previous report week, according to the EIA. Natural gas consumed for power generation declined by 1% week over week. Industrial sector consumption decreased by 3% week over week. In the residential and commercial sectors, consumption declined by 9% as temperatures warmed in the Southeast. Natural gas export levels to Mexico were the same as last week, averaging 4.3 Bcf per day. Heating degree days in the Pacific Region since the week of February 18, 2018, have been 29% higher than normal on average for this time of year. To respond to this heightened demand

U.S. durable goods orders rebounded

U.S. durable goods orders rebounded 3.1% in February after dropping a revised 3.5% in January. Transportation orders climbed 7.1% versus -9.8% and were up 1.2% excluding transportation from a 0.2% decline which was revised from -0.3%. Nondefense capital goods orders excluding aircraft surged 1.8% from -0.4% which was revised from -0.2%.