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David Becker
Natural Gas
Natural Gas

Natural gas prices slide lower on Wednesday as Hurricane Michael slammed into the western coast of Florida.  The storm hit the coast as a category 4-storm with winds near 150-miles per hour.  It appears that most natural gas installations where not hit by high winds and man power will reduce to installation within the next few days. There should be very little disruption to production of natural gas in the Gulf of Mexico.  The weather according to a forecast from the National Oceanic Atmospheric Administration is expected to be colder than normal over the next 2-weeks.

Technical analysis

Natural gas prices attempted to move higher but was unsuccessful and declined back to support which was former resistance near a downward sloping trend line that comes in near 3.25.  Additional support on natural gas prices is seen near the 10-day moving average at 3.166. Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The RSI (relative strength index) moved sideways which reflects consolidation.

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Production Continues to Remain Elevated

EIA estimates dry natural gas production in the United States averaged 85.1 billion cubic feet per day in September, up 0.6 Bcf per day from August. EIA forecasts that dry natural gas production will average 82.7 Bcf per day in 2018, up by 7.9 Bcf per day from 2017 and establishing a new record high. EIA expects natural gas production will continue to rise in 2019 to an average of 87.7 Bcf per day.

EIA forecasts that U.S. natural gas storage inventories will total 3.3 trillion cubic feet at the end of October. This level would be 14% lower than both the 2017 end-of-October level and the five-year average for the end of October, and it would also mark the lowest level for that time of year since 2005.

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