Natural Gas Rebounds but Demand is Weakening

David Becker
Natural gas daily chart, April 03, 2018
golden sunset in crude oil refinery with pipeline system

Natural gas prices rebounded on Tuesday bouncing near support at the 10-day moving average at 2.66.  Resistance is seen near the 50-day moving average at 2.78. Prices have been moving sideways as supply is flat but demand is declining.  Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which points to consolidation.

Supply is flat

Supply is nearly flat according to data from the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 85.9 Bcf per day. Dry natural gas production remained constant week over week. With warmer weather in the Northeast and New England, average net imports from Canada decreased by 6% from last report week.

Demand Decreases

Demand decreases as warmer weather moves in across the Lower 48 states. Total U.S. consumption of natural gas fell by 4% compared with the previous report week, according to data from the Energy Information Administration.  Natural gas consumed for power generation was flat, averaging 23.2 Bcf/d. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 9%. Natural gas exports to Mexico were the same as last week, averaging 4.3 Bcf per day.

U.S. liquefied natural gas exports increase week over week. Five vessels combined LNG-carrying capacity 18.2 Bcf departed the Sabine Pass liquefaction facility from March 22 to March 28. Two vessels combined LNG-carrying capacity 7.0 Bcf were loading at the terminal on Wednesday.

NAFTA is Coming Next Week

Trump administration is seeking a preliminary NAFTA deal by next week, and will host cabinet ministers in Washington in order to bring about a successful result. The White House seeks to have the leaders of Canada and Mexico gather at the Summit of the Americas that begins April 13 to announce the general outline of a new trade agreement. Details of the agreement would continue to be discussed.

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