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David Becker

Natural gas prices broke down on Tuesday slicing through trend line support and poised to test the April lows. This comes despite an uptick in LNG exports which shows stronger foreign demand. The weather is expected to be much warmer than normal during the next 6-10 and 8-14 days, but this failed to buoy concern amongst traders. Natural gas inventories are expected to climb by 101 Bcf according to survey provider Estimize.

Technical Analysis

Natural gas prices broke down through trend line support dropping 5.4%, and is now targeting the April lows at 1.65. There is support just above that level at 1.70. Resistance on natural gas is seen near the trend line break down near 1.80 and then the 50-day moving average at 1.87. Short term momentum is negative as the fast stochastic is tumbled lower printing a reading of .9, well below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum is also negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. The MACD histogram also generated a crossover sell signal and is printing in the red with a downward sloping trajectory which points to lower prices.

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LNG Exports Rise

US LNG exports rose week over week. Fifteen liquefied natural gas vessels with a combined LNG-carrying capacity of 54 Bcf departed the United States between April 30 and May 6, 2020, according to shipping data from the EIA. A rise in LNG exports reflects an uptick in demand from Asia where most of the tankers are headed.

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