Natural Gas Slips After Hitting Fresh 13-year Highs

Key Insights

• Natural Gas prices hit a fresh 13-year intra-day high.
• Natural gas arrivals at LNG terminals fell.
• The weather is expected to be colder than average in the mid-West.

Natural gas prices hit a 13-year rising but whipsawed and settled the session lower. Demand remains strong, but natural gas arrivals at LNG terminals were down. According to Natural Gas Intelligence, arrivals were the lowest in 2-weeks. A storm bringing snow will dump significant volumes on the upper plains.

The weather is expected to be much colder than average in the mid-West over the next 6-10 days and moderating over the next 8-14 days, but still colder than average.  This scenario will increase heating demand.

Technical Analysis

Natural gas prices hit a fresh 13-year intraday high but whipsawed as traders took profits. Target resistance is seen near the July 2008 highs at 13.68. Support is seen near the 10-day moving average at 6.07.

Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are overbought. The fast stochastic is printing a reading of 85, above the overbought trigger level of 80. Additionally, the RSI is printing a reading of 78, above the overbought trigger level of 70.

Medium-term momentum has turned positive. The MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to an acceleration in the underlying price of natural gas.