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David Becker
Natural Gas

Natural gas prices gapped higher but was unable to recapture resistance and slid into the close of the trading session. Colder than normal weather is expected to cover most of the west coast and the mid-west over the next 6-10 days and 8-14 days. Production remains strong and the rig count is declining which should help buoy prices. Inventories remain near the lower end of the 5-year average range for this time of year.

Technical Analysis

Natural gas prices gapped higher on the open climbing as high at 8% before running into resistance near the 10-day moving average at 2.71. Prices came off into the close of the trading session and settled near the open which reflects indecision. Support on natural gas is seen near the February lows at 2.55. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 14, below the oversold trigger level of 20 which could foreshadow a correction. Medium term positive momentum is decelerating as the MACD histogram is printing in the red with an upward sloping trajectory which points to consolidation.


US Rig Count is Declining, But Supply is Flat

US Natural Gas rig count is at a current level of 195.00, down from 198.00 last week and up from 181.00 one year ago, according to oil service giant Baker Hughs. This is a change of -1.5% from last week and 7.7% from one year ago. Despite the decline in the number of rigs producing gas, supply remains flat. According to data the Energy Information Adminstration, the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 22% from last week as warmer weather reduced the need for Canadian natural gas supplies.

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