The weather is expected to be normal over the next 8-14 days
On Friday, natural gas prices dropped 3% following Thursday’s smaller than expected draw in natural gas inventories. The weather is expected to be normal over the next 2-weeks, and as the calendar moves into the shoulder season, builds are likely to rise. Demand declined to a four year low week over week according to a report from the Energy Information Administration.
Natural gas prices tumbled on Friday, dropping 3%, and hitting a 5-week low. The 10-day moving average has crossed below the 50-day moving average which means a medium-term down trend is now in place. Support is seen near the January lows at 2.55. Resistance is seen near the 10-day moving average at 2.71. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are oversold. The fast stochastic is printing a reading of .28, well below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a declining trajectory.
Demand declines as residential and commercial consumption fall to the lowest level for the same week since 2016. Total U.S. consumption of natural gas fell by 4.8% compared with the previous report week. Natural gas consumed for power generation declined by 2.9% week over week. Industrial sector consumption decreased by 0.8% week over week. In the residential and commercial sectors, consumption fell by 9.0% as warmer-than-average temperatures across most of the country depressed space heating demand. Natural gas exports to Mexico increased 3.4%
David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.