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David Becker
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Natural gas prices rebounded from session lows as colder than expected weather is forecast to move across most of the west coast of the US over the next 6-10 and 8-14 days. The cold weather is expected to be offset by warmer than normal weather that will cover the east coast and the mid-west of the US during the same period. Demand in the US fell led by the lack of heating in commercial buildings.

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Technical Analysis

Natural gas prices whipsawed, forming an outside reversal day initially moving lower and testing the 2016 lows at 1.61, before reversing course and rallying more than 4%. This points to a reversal. The whipsaw price action allowed natural gas to recapture resistance which is now short term support near the 10-day moving average at 1.77. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The RSI diverged which is also a reflection of accelerating positive momentum. The MACD (moving average convergence divergence) index also generated a crossover buy signal which points to higher prices.

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Demand declined

Demand fell in the latest week driven by declines for heating demand in buildings. Total U.S. consumption of natural gas fell by 8% compared with the previous report week, according to data from the EIA. In the residential and commercial sectors, consumption declined by 14%. Natural gas consumed for power generation declined by 4% week over week. Industrial sector consumption decreased by 3% week over week. Natural gas exports to Mexico increased by 3%.

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