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David Becker

Natural gas prices rebounded from session lows on Wednesday and finished the session nearly unchanged. The weather is expected to become colder than normal for the next 8-14 days throughout the United States turning much cooler in the North East which is expected to remain warm during this period. According to the EIA, both natural gas production and exports will increase from 2020 to 2050.

Technical Analysis

 

Natural gas prices broke out and then consolidate above trend line resistance and is poised to test the January highs at 2.20. Support on natural gas prices is seen near the 10-day moving average at 1.86. 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 crossed above the zero-index line, which is also a buy signal. The MACD histogram is printing in the black with a rising trajectory which points to higher prices. The RSI (relative strength index) surged higher reflecting accelerating positive momentum. The fast stochastic also rallied after generating a crossover buy signal. The current reading on the fast stochastic is 92, well above the overbought trigger level of 80 which could foreshadow a correction.

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The US is Poised to Increase Production

The Energy Information Administration’s published a study in its Annual Energy Outlook 2020 where they see total dry natural gas production in the United States continues to increase until 2050 in most scenarios, primarily to support growing U.S. exports of natural gas to global markets.

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