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David Becker

Natural gas prices moved higher on Friday. This comes as Baker Hughes reported that the total number of active gas rigs in the United States fell by 2 to 100. This compares to 194 a year ago. Baker Hughes also reported on Friday that the number of active U.S. rigs drilling for oil dropped by 62 to 562 this week. That followed decline of 40 oil rigs the week before. The total active U.S. rig count, meanwhile, also declined by 64 to 664. The weather is expected to be warmer than normal in the United States for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration, which will continue to generate headwinds for prices.

 

 

Technical Analysis

 

 

Natural gas prices moved higher on Friday rebounding from support near the all-time lows 1.51. Resistance on natural gas prices is seen near the 10-day moving average at 1.66. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal, in oversold territory. The current reading on the fast stochastic is 35, up from 8, which was in oversold territory which reflects accelerating positive momentum. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

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Rigs Drop and Employment Tumbles

The drop in the number of rigs is definitely impacting employment in the Texas region. The number of rigs in the most prolific basin, the Permian, fell by 31 this week to 351, compared to 462 rigs one year ago. The second-largest basin, the Eagle Ford, lost 6 rigs this week, for a total of 57 rigs, compared to 78 a year ago.  This came as the Labor Department reported a 701K decline in non-farm payrolls. This follows a 10-million increase in jobless claims over the past 2-weeks.

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