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David Becker

Natural gas prices moved lower on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for inventories to decline by 3 Bcf. This follows at 9 Bcf draw in inventories in the prior week. The weather is expected to remain warmer than normal for the next 2-weeks according to the National Oceanic Atmospheric Administration. Demand is higher driven by electricity demand.

Technical Analysis

Natural gas prices edged lower with resistance near the 10-day moving average at 1.68. Support is seen near the March lows at 1.55. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory that points to consolidation. Prices are trading sideways looking for an impetus following a huge decline in short positions.

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Demand Rises

Demand rises, driven by gains in the power sector. According to the EIA, total U.S. consumption of natural gas rose by 3% compared with the previous report week. Natural gas consumed for power generation climbed by 8% week over week in the low natural gas price environment. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption declined overall by 1%. Natural gas exports to Mexico increased by 1%.

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