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David Becker
Natural gas weekly chart, February 18, 2019

Natural gas prices moved higher on Monday, in light volume as most of the US was off due to the President’s day holiday. The Energy Information Administration slightly altered their natural gas production figures to show an increase of nearly 7 Bcf per day during the year.  Consumption domestically will be a function of the weather and manufacturing, along with an increase in exports that are from LNG terminals.

Technical Analysis

Natural gas prices pushed higher recapturing short term resistance which is now support seen near the 10-day moving average at 2.62. additional support is seen near a horizontal trend line at 2.55. Resistance is seen near former support near the recent breakdown level at 2.88. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The fast stochastic is now printing a reading of 25, which is above the oversold trigger level of 20, and reflects accelerating positive momentum. The MACD has also generated a crossover buy signal. The trajectory is flat which points to consolidation, and prices that are grinding higher.

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The EIA Expects Strong Production Growth

The Energy Information Administration expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019. The EIA forecasts that dry natural gas production will average 90.2 billion cubic feet per day in 2019, up 6.9 Bcf per day from 2018. EIA expects natural gas production will continue to rise in 2020 to an average of 92.1 Bcf per day.

For the demand to keep up with supply, LNG exports will need to rise. The EIA reports that US liquefied natural gas exports increase week over week. Exports from Sabine Pass were down last week because of heavy fog restricting transit through the shipping channel, which disrupted operations at the facility. Scheduled natural gas deliveries to the terminal fell to 0.7 Bcf per day during the fog, the lowest level since January 2018, when freezing weather disrupted the water supply to the terminal.

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