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David Becker

Natural gas prices moved higher on Tuesday but continue its volatile trading whipsawing lower and then moving higher. After today’s close, the June contract became the prompt contract. The premium to the May was approximately 10-cents per mmbtu. The weather is expected to be cooler than normal in the east and warmer than normal in the west, but the seasonal nature of April as a shoulder month is expected to yield little demand. In fact demand declined in the latest week driven by declines in power generating.

Technical Analysis

Natural gas prices moved higher rising nearly 1.5% but closed well off the season highs. Short term support is seen near the 10-day moving average at 1.93. Additional support is seen near an upward sloping trend line that comes in near 1.77. Resistance is seen near a downward sloping trend line that is seen near 2.09. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is neutral as the MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat tractor which reflects consolidation.


Demand Declines in Latest Week

Natural gas demand falls, driven by declines in power generation. Total U.S. consumption of natural gas fell by 3% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 6% week over week. Industrial sector consumption decreased by 3% week over week. In the residential and commercial sectors, consumption remained at last week’s level, averaging 22.1 Bcf per day. Natural gas exports to Mexico increased 3%.

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