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David Becker
Natural Gas

Natural gas prices moved higher on Tuesday as colder than normal weather is now spreading throughout the US. NOAA now forecasts that the entire nation will experience cooler than normal temperatures which will likely increase heating demand. There is one disturbance moving through the Caribbean that has a 0% chance of becoming a tropical cyclone during the next 48-hours. Tropical storm Epsilon is expected to move toward the east coast of the US but is not likely to impact any natural gas infrastructure. Total consumption is expected to decline in 2020 according to the EIA.

Technical Analysis

Natural gas prices moved higher rising more than 4.0%, but closed off the highs of the session. Prices recaptured resistance which is now short-term support near the 50-day moving average at 2.76. The 10-day moving average is poised to cross above the 50-day moving average which means that a short-term up trend is now in place. Resistance is seen near the October highs at 2.95. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

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The EIA Expects Demand to Decline

EIA expects that total U.S. consumption of natural gas will average 83.7 billion cubic feet per day in 2020, down 1.8% from 2019. The decline in total U.S. consumption reflects less heating demand in early 2020, contributing to residential and commercial demand in 2020 averaging 13.1 Bcf/d. The EIA forecasts industrial consumption will average 22.3 Bcf/d in 2020, down 0.8 Bcf/d from 2019 as a result of reduced manufacturing activity. EIA expects total U.S. natural gas consumption will average 78.7 Bcf/d in 2021, a 5.9% decline from 2020.

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