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David Becker
Natural Gas

Natural gas prices dropped on Monday as concerns over a trade war hit the energy space. This comes despite news that the US hit a fresh daily record in July of natural gas consumption. Higher electricity demand continues to drive demand. Production remains elevated which is easily countering the strong demand for electricity.

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Technical Analysis

Natural gas prices dropped more than 2% mid-day on Monday, as riskier assets came under pressure. Prices dropped below 2.03 for the first time since 2016. Support is seen near the 2016 lows at 1.62. Resistance is seen near 10-day moving average at 2.17. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. Prices are also oversold. The fast stochastic, which is an oscillator that measures overbought and oversold levels, is printing a reading of 15, below the oversold trigger level of 20 which could foreshadow a correction.

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The EIA Reports Robust Demand

The EIA reports that the United States set a new daily record on Friday, July 19, of 44.5 billion cubic feet for natural gas consumption by electric power plants. US power sector natural gas consumption exceeded the previous record of 43.1 Bcf, set on July 16, 2018, on five days in July. Higher-than-normal temperatures and relatively low natural gas prices contributed to increased natural gas consumption by electric generators. Higher electricity demand for air conditioning during a heatwave from July 15 through July 22 drove the increased power generation, especially from natural gas-fired generators. Although the highest temperatures occurred during the weekend, most states east of the Rocky Mountains experienced warmer-than-normal weather in the days leading up to the heatwave.

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