Natural Gas Prices Break Out to Fresh Highs on Strong LNG Demand

Key Insights

• Natural Gas prices hit a fresh 13-year high.
• Natural gas arrivals at LNG terminals were unchanged
• The weather is expected to be colder than average in the mid-West

Natural gas prices hit a 13-year rising 5.5% on Monday after a 10% climb last week. Demand remains strong, but natural gas arrivals at LNG terminals were flat compared to Friday. On Monday, week over week, natural gas arrivals at LNG terminals were 4% higher.

The weather is expected to be much colder than average in the mid-West over the next 6-10 days and moderating over the next 8-14 days but still colder than normal.  This scenario will increase heating demand.

According to the EIA, U.S. LNG exports decreased by two vessels weekly. Twenty-three LNG vessels with a combined LNG-carrying capacity of 86 Bcf departed the United States between March 31 and April 6.

Technical Analysis

Natural gas prices broke out to fresh 13-year highs and are poised to trend higher. Target resistance is seen near the July 2008 highs at 13.68. Support is seen near the 10-day moving average at 5.93.

Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic is printing a reading of 96, above the overbought trigger level of 80.

Medium-term momentum has turned positive. The MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to an acceleration in the underlying price of natural gas.