Natural Gas Price Analysis for March 6, 2018

Natural gas prices were slightly higher on Monday, rebounding following a stronger than expected ISM services report. This was offset by prediction for the International Energy Agency which believes that natural gas and oil production in the U.S. will surge.

Technicals

Natural gas prices edged higher and continue to consolidate following the recent tumble since the end of February.  Support is seen near the 10-day moving average at 2.66. 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 MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

IEA Predicts Higher U.S. Production

In its latest annual outlook, the IEA forecasted that strong economic growth around the world will continue to support strong oil consumption until at least 2023. Along with surging output from the U.S., rising production in Canada, Brazil and Norway will be able to meet higher demand through 2020. The IEA projects the United States will pump 17 million barrels a day of crude oil, condensates and natural gas liquids, easily defending its title as the world’s top producer of petroleum products. That’s up from 13.2 million barrels a day in 2017.

ISM Services Was Stronger than Expected

The Institute for Supply Management’s survey of service-oriented companies fell slightly in February one month after hitting a nearly 12-year high. The ISM non-manufacturing index slipped to 59.5 from 59.9 in January. The sub-index for employment fell 6.6 points to 55.0 to account for the decline in the headline ISM number. The indexes for new orders, however, rose again to 64.8 from 62.7 and reached a 12-year peak. Altogether, 16 of the 17 industries tracked by ISM said their businesses were expanding, more evidence the U.S. economy is robust.