Advertisement
Advertisement

Natural Gas Prices Break Out on Cold Weather Forecst

By:
David Becker
Published: Mar 4, 2022, 19:17 UTC

Consumption rose in all sectors across the United States

Natural Gas Prices Break Out on Cold Weather Forecst

In this article:

Natural gas prices broke out on Friday as cold weather is expected to cover most of the United States for the next 10-days. The late-season cooling demand comes when risk appetites for commodity products have exploded. Natural gas in Europe hit an all-time high on Friday, rising above €200 per megawatt. LNG exports cannot come fast enough, and Russia has already shown that they are willing to take out nuclear plants to get what they want.

The weather is now expected to be much colder than average throughout most of the country for the next two weeks. According to Baker Hughes, the rig count for natural gas increased by three rigs. Implied volatility rose, making the risk of options much more extensive than expected.

U.S. natural gas demand is up in every consuming sector this week. Total U.S. consumption of natural gas rose in all sectors this week, increasing by 4.5% compared with the previous report week, according to the EIA. Natural gas consumption for power generation climbed by 8.8% week over week, and in the residential and commercial sectors, consumption increased by 4.1%.

Technical Analysis

Natural gas prices surged higher, rising by 12% for the week. Support near the 10-day moving average at 4.61. Resistance is seen near the February highs at 5.72.

Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought with the fast stochastic printing a reading of 99, above the overbought trigger level of 80. Medium-term momentum is positive. The MACD (moving average convergence divergence) index is printing in positive territory with an upward sloping trajectory which points to higher prices.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

Did you find this article useful?

Advertisement