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David Becker

Natural gas prices rebounded from session lows, closing nearly unchanged and bouncing near support of an upward sloping trend line. Demand declined in the latest week due to milder weather. The weather is expected to remain mild across the mid-west and the east coast, which has put downward pressure on prices.

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Technical Analysis

Natural gas prices edged lower but settled well off the session lows. Prices tested support near the 50-day moving average at 2.715 but bounced. Resistance is seen near the 10-day moving average at 2.89. Prices are oversold. The fast stochastic is printing a reading of 19-below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum is negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average crosses below the MACD signal line (the 9-day moving average of the MACD line. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

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Demand Declines

Demand declines in response to lower heating and power demand. ACCORDING TO THE EIA, total U.S. consumption of natural gas fell by 20.8% compared with the previous report week. Consumption in the residential and commercial sectors declined by an estimated 28.1%, or 17.65 Bcf per day, the highest weekly decline on record. Natural gas consumed for power generation fell by 16.1% week over week. Industrial sector consumption decreased by 9.9% week over week.

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