Natural Gas Prices Rebound as Rig Count Remains Flat

Key Insights

• Natural gas prices rallied on Friday.
• The weather is expected to be mixed.
• Natural gas supplies declined in the latest week.

On Friday, natural gas prices moved higher, finishing the week on an up note. The weather is expected to be mixed, colder in the north and northeast and warmer throughout the south and southeast. Natural gas supplies declined in the latest week, helping to buoy prices. Natural gas rigs were unchanged in the latest week. Chicago PMI data showed manufacturing is stalling, which could weigh on prices.

The EIA reports that U.S. natural gas supply decreased slightly this week. The average total supply of natural gas fell by 0.5% this week when compared with the previous report week. Dry natural gas production decreased by 0.5%, and average net imports from Canada were flat compared with last week.

Technical Analysis

Natural gas prices rebounded after closing down 5% on Thursday. Support is seen near the 20-day moving average at 6.6.7. Target resistance is seen near the April highs at 8.06.

Medium-term momentum is negative. The MACD histogram is printing in negative territory with a flat trajectory which points to consolidation. The MACD (moving average convergence divergence) generated a crossover sell signal. Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal.

The fast stochastic continues to chop sideways, generating sell signals and buy signals on consecutive days, which points to consolidation.