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David Becker
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Natural gas prices eased on Tuesday, edging back to support levels. This situation comes as warmer than normal weather is expected to cover most of the East Coast and West Coast for the next 8-14 and 6-10 days. According to the most recent forecast from the Department of Energy, demand is expected to decline during the balance of 2021 and 2022.

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Technical Analysis

Natural gas prices slipped back to support levels seen near the 50-day moving average at 2.71. Additional support is seen near the 10-day moving average at 2.62. Resistance is seen near the March highs at 2.92. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 90, above the overbought trigger level of 80 foreshadowings a correction.  Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in positive territory with an upward sloping trajectory which points to higher prices.

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Demand is Expected to Decline

The Energy Information Administration forecasts that natural gas consumption will decrease in 2021 and 2022 following a decline in 2020. Consumption in 2020 was 1.9 billion cubic feet per day  lower than the all-time high of 85.1 Bcf per day set in 2019. Total consumption declined as a result of the economic slowdown associated with the COVID-19 pandemic and lower heating demand amid milder temperatures.

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