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David Becker
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Natural gas prices broke out on Monday, rising above resistance on colder than expected temperatures. According to the latest report from the National Oceanic Atmospheric Administration, the weather is expected to be colder than normal over the next 6-10 and 8-14 days. Residential and commercial consumption of natural gas declines sharply in the previous week.

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Technical Analysis

Natural gas prices rallied more than 2% on Monday. Prices pushed through resistance now seen as support near the 50-day moving average at 2.71. Target resistance is seen near the March highs at 2.92. Prices are overbought. The current reading on the fast stochastic is 95, above the overbought trigger level of 80, foreshadowing a recession. Medium-term momentum is 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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Consumption Declines

Residential and commercial consumption of natural gas declined sharply. Total U.S. consumption of natural gas fell by 3.6% compared with the previous report week. Natural gas consumed for power generation climbed by 5.7% week over week. Industrial sector consumption decreased by 1.7% week over week. In the residential and commercial sectors, consumption declined by 16.6% as above-average temperatures in the early part of the report week affected heating demand.

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