Natural Gas Prices Rise Closing at a Multi-Month High

Key Insights

• Natural Gas prices rallied sharply
• Prices closed near a four-month high
• The weather is expected to be normal

Natural gas prices broke out on Wednesday ahead of Thursday’s inventory report from the Energy Information Administration. According to survey provider Estimize, expectations are for a 14 Bcf draw in stockpiles. The weather is expected to be normal during the next 6-10 and 8-14 days, with warm on bost Coasts.

U.S. natural gas consumption is led down by the residential and commercial sectors. Total U.S. consumption of natural gas fell by 18.6% compared with the previous report week. Natural gas consumed for power generation declined by 7.0% week over week. Industrial sector consumption decreased by 5.5%. In the residential and commercial sectors, consumption declined by 37.1%.

Technical Analysis

On Wednesday, natural gas prices closed at a multi-month high and is poised to test higher levels. Resistance is seen near the October highs at 6.46.

Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices have moved back into over-bought territory with the Fast Stochastic printing a reading of 93, above the overbought trigger level of 80.

Medium-term momentum has turned positive. The MACD (moving average convergence divergence) index makes a crossover buy signal. This scenario occurs when the MACD line (the 12-day moving average minus the 26-day moving average, crosses above the 9-day moving average of the MACD line.