Natural Gas Prices Slip as Production Rises

Key Insights

• Natural Gas prices consolidated and moved lower
• The weather is expected to be near normal
• Supply was flat

Natural gas prices consolidated and moved lower for a second consecutive trading session on Tuesday. The weather is expected normal during next 6-10 and 8-14 days, with warm weather on the West Coast and Cool Weather in the Mid-Atlantic.

An increase in U.S. natural gas production is offset by a decrease in imports from Canada. According to the EIA, the average total supply of natural gas rose slightly by 0.3% compared with the previous report week. Dry natural gas production grew by 1.1% compared with the previous report week. Average net imports from Canada decreased by 13.9% from last week.

Technical Analysis

On Tuesday, natural gas prices consolidated, moving lower,  but held support near a downward sloping trend line near 5.37. Resistance is seen near the February highs at 5.57.

Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices have moved from overbought printing a reading of 88, to 75 which is in the neutral zone reflecting accelerating negative momentum. 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.