David Becker
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Natural Gas
Natural Gas

Natural gas prices bounced from session lows making a lower low which keeps the downtrend in place. This comes despite a rebound in price action which saw prices close up 1.3%, but unable to take out Tuesday’s highs. Traders await Thursday inventory report from the Department of Energy. While producer prices in the U.S. increased by more than expected rising by 3.5% year over year, it was pulled down by natural gas prices which are lower on a year over year basis. Prices could get a boost as Donald Trump shamed Germany today for getting their natural gas from Russia. The U.S. can now produce LNG gas which can be shipped by companies like Cheniere Energy.

The Weather Has Moderated Allowing Prices to Slide

The weather over the next 2-weeks is expected to be mixed with warm weather in both the east and west coasts, and normal weather in the mid-west. The moderate temperatures should limit unexpected cooling demand. This comes on the heels of the hottest July 6, on record on southern California reaching temperate of 110 F. Natural gas inventories are in the lower end of the 5-year range below the 5-year average but above the lower end of the range.

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The trend is pointing to lower prices as the 10-day moving average is poised to cross below the 200-day moving average which shows that a short-term downtrend is now in place. Resistance is seen near the 200-day moving average at 2.87, while support is seen near an upward sloping trend line that comes in near 2.67. Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices for natural gas. The relative strength index (RSI) moved higher and is in the middle of the neutral range which reflects consolidation.

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