Natural Gas Slides but Holds Key Support

Natural gas moved lower on Tuesday, testing critical support. The weather is expected to be much colder than normal in the South, mid-West, and East Coast during the next 6-10 days. The weather will likely moderate during the next 8-14 days, with colder air in the mid-West and East Coast and warmer air on the West Coast. U.S. consumption of natural gas increased across the entire U.S. last week due to the weather and LNG exports.

 Technical Analysis

On Tuesday, natural gas prices dipped, testing support near an upward sloping trend line that comes in near 4.61. Additional support is seen near the 10-day moving average at 4.23. Resistance is seen near the December highs at 5.51. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in positive territory with an accelerating trajectory which points to higher prices. Prices are overbought as the fast stochastic is printing a reading of 87, above the overbought trigger level of 80.

Natural Gas Consumption Rises

U.S. total consumption of natural gas increases across all sectors compared with the previous report week. Total U.S. consumption of natural gas rose by 14.2% compared with the previous report week, with increases greater than 4% week over week in all sectors. The largest increase was in the residential and commercial sectors, where consumption increased by 21.4% as substantial below-average daytime and nighttime temperatures took hold.