Natural Gas Rises for the Week as Demand Increases

Natural gas prices edged lower on Friday, but are higher by 1.4% for the week.  This weeks inventory report by the Department of Energy was in line with expectations.  Supply was flat week over week and demand was higher helping prices remain buoyed.  Support on natural gas is seen near the 10-day moving average at 2.80.  Resistance is seen near the 3.20 level. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which reflects consolidation.

Overall supply is flat week over week

Overall supply is flat week over week. According to data from the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 85.6 Bcf/d. Dry natural gas production decreased by 1% compared with the previous report week, largely because of Northeast production declines associated with takeaway capacity reductions from the Millennium pipeline maintenance. Average net imports from Canada increased by 1% from last week.

Overall supply is flat week over week

Demand increases week over week as electric power sector consumption rises. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 8% week over week as average temperatures for the week rose higher than 75°F in parts Texas and the Southeast. Industrial sector consumption stayed constant, averaging 19.9 Bcf/d. In the residential and commercial sectors, consumption increased by 3% with much of the West and Northeast cooler this report week compared with last report week. Natural gas exports to Mexico were the same as last week, averaging 4.4 Bcf per day.

Working gas in storage was 1,538 Bcf as of Friday, May 11, 2018, according to EIA estimates. This represents a net increase of 106 Bcf from the previous week. Stocks were 821 Bcf less than last year at this time and 501 Bcf below the five-year average of 2,039 Bcf. At 1,538 Bcf, total working gas is within the five-year historical range.