Natural Gas Surges Higher as Cooling Demand Increases

Natural gas prices rebounded as warmer weather in California is buoying cooling demand. Prices increased 2% late in the trading session on Friday, after breaking out above trend line resistance that is now short-term support near 2.72. Resistance is seen near the March highs at 2.81. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occur as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The RSI (relative strength index) broke out above resistance which reflects accelerating positive momentum which points to higher prices.

Natural gas consumption rises because of both heating and cooling demand

Natural gas consumption rises because of both heating and cooling demand. Total U.S. consumption of natural gas rose by 7% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 4% week over week, as some Pacific and southern regions experienced an increase in cooling degree days. In the residential and commercial sectors, consumption increased by 14% as a result of northern regions that experienced an increase in heating degree days (HDD). Industrial sector consumption increased by 2% week over week. Natural gas exports to Mexico increased 16% with the conclusion of maintenance on Mexico’s Los Ramones pipeline, according to EIA data.

Warm temperatures in California support higher natural gas prices

Warm temperatures in California support higher natural gas prices. Prices at PG&E Citygate in Northern California rose. The price at SoCal Citygate increased last Wednesday, with a high of $3.83/MMBtu on Tuesday. Los Angeles had daily high temperatures of 95 degrees Fahrenheit on Monday and 85°F on Tuesday, supporting demand increases because of cooling needs. Parts of the Southeast also experienced higher temperatures, leading to increased cooling demand.