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David Becker

 

 

Natural gas prices rose slightly more than 1% on Wednesday ahead of Thursday inventory report. Expectations are for a 45 Bcf build. Tropical storm Gonzalo formed in the Atlantic and is headed for the Caribbean. There is a disturbance that is forming in the Gulf of Mexico, which has a 70% chance of turning into a tropical cyclone. This could generate volatility for natural gas prices. Demand rose across all sectors during the latest week according to the EIA.

Technical Analysis

Natural gas prices rebound and closed on its highs of the session. Resistance is seen near the 10-day moving average at 1.73. Support is the July lows at 1.60. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum remains neutral to negative as the MACD (moving average convergence divergence) histogram prints near the zero index level with a flat trajectory that points to consolidation.

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Demand is on the Rise

Total U.S. consumption of natural gas rose by 0.9% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 1.2% week over week as power generation steadily increased since mid-June. Power burn hit 43.6 Bcf per day, the highest daily level since August 2019 before falling back to near 40 Bcf/d by the middle of the report week.

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