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David Becker
Crude Oil daily chart, May 24, 2019

Natural gas prices continued to rebound on Friday rising slightly more than 0.75%, following Thursday’s smaller than expected build in natural gas inventories. Demand moved lower in the most recent week, and supply was flat, must these numbers were not reflected by the build in natural gas stockpiles. The weather is expected to become more mild in the 8-14 day forecast, which should weigh on natural gas demand.

Technical Analysis

Natural gas prices whipsawed higher, closing above the most recent breakdown level, and ended the week on a positive note become the long holiday weekened in the US. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic has rebounded after being in oversold territory which points to accelerating positive momentum. Medium term momentum is neutral. The MACD (moving average convergence divergence) histogram is printing in the black with a flat trajectory which points to consolidation.


Supply is Flat and Decmand Declines

Supply remains flat, according to the most recent report from the Department of Energy. The EIA reports that the average total supply of natural gas remained the same as in the previous report week, averaging 93.6 Bcf per day. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada increased by 4% from last week.

Demand falls driven by a large declilne in residential and commercial sectors. Total US consumption of natural gas fell by 3% compared with the previous report week, according to data from the energy information adminstration. Natural gas consumed for power generation climbed by 7% week over week with warm temperatures and cooling demand in the Southeast. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption declined by 17% with moderate temperatures and low demand for heating. Natural gas exports to Mexico decreased by 4%.

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