Natural Gas Price Analysis for March 5, 2018

Natural gas prices continue to remain stable hovering near support levels as it consolidates its losses over the last 4-weeks. Inventories remain near the bottom of the 5-year range, but production is steady, and demand is stable. There are few catalyst that would drive prices much higher, unless there is a supply disruption.  The only demand increases that have been seen are the increases in exports of LGN, which should continue to rise as global demand for natural gas increases.

Technicals

Natural gas prices moved higher and continue to hover above support near the 10-day moving average at 2.65. Resistance is seen near the 50-day moving average at 2.88. Momentum has turned positive as the MACD (moving average convergence divergence) index generated 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). The RSI is moving sideways and is choppy which reflects a consolidation period.

Supply rises slightly

According to data from the EIA, the average total supply of natural gas rose by 1% compared with the previous report week. Similarly, dry natural gas production grew by 1% compared with the previous report week. The trade press has noted that record production in recent weeks may be having a moderating effect on prices. Average net imports from Canada increased by 4% from last week.

Demand remains flat

The EIA reports that total U.S. consumption of natural gas was unchanged from the previous report week, averaging 75.0 Bcf per day. Natural gas consumed for power generation climbed by 4% week over week. Industrial sector consumption stayed constant, averaging 21.8 Bcf per day. In the residential and commercial sectors, consumption declined by 2%. Natural gas exports to Mexico increased by 1%.

U.S. liquefied natural gas exports increased

U.S. liquefied natural gas exports increase week over week. Five LNG vessels departed the Sabine Pass liquefaction facility from February 22 to February 28.