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David Becker
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Natural gas prices broke out on Monday, as short were squeezed out of the market. Warmer than normal weather which is expected to cover most of the mid-west and east coast over the next 6-10 and 8-14 days generated a surge in prices that buoy natural gas more than 15%. There is one tropical stork in the Atlantic but it is moving up the east coast and will not generate a disturbance to natural gas installations.

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Technical Analysis

Natural gas prices surged higher rising 16.5% on Monday. Support is seen near a downward sloping trend line that comes in near 1.92. Resistance is seen near the May 2020 highs at 2.50. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

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Demand Rises in Latest Week

Demand rises across all domestic sectors, with power generation reaching a summer high. 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 0.7% week over week, reaching 43.6 Bcf/d on Monday, the highest level so far in summer 2020. Industrial sector consumption increased by 1.3% week over week. In the residential and commercial sectors, consumption increased by 0.6%. Natural gas exports to Mexico decreased 0.9%.

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