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David Becker
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Natural gas whipsawed initially surging higher but finishing the day in the red. The weather is expected to be much colder than normal through all of the United States for the next two weeks. The ridge/ trough pattern could mean that the cold weather could remain in place for a considerable period. Prices are very choppy as inventories move lower.

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Technical Analysis

Natural gas prices dropped 2.6% on Friday after hitting fresh 2-month highs. Short term support near a downward sloping trend line that comes in near 2.80. Resistance is seen near the February highs at 3.6. The trend is upward sloping. The 10-day moving average recently crossed above the 50-day moving average, which means that a short-term uptrend is now in place. Momentum is positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

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Demand Rise

Natural gas demand rises with increased demand for space heating. According to the EIA total U.S. consumption of natural gas rose by 2.5% compared with the previous report week. On January 28, total consumption reached nearly 124 Bcf/d, the highest level so far this winter. Natural gas consumed for power generation climbed by 3.1% week over week. In the residential and commercial sectors, consumption increased by 2.8%. Industrial sector consumption increased by 1.3% week over week. Natural gas exports to Mexico decreased 5.6%.

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