Natural Gas Price Analysis for March 21, 2018

Natural gas prices increased on Tuesday reversing Monday’s slide. Price increased came with colder weather in many of the Lower 48 states. As average temperatures for states east of the Mississippi were colder this report week compared with the last report week, the average price for the week rose this report week. Temperatures in the Lower 48 states were expected to be warmer and then turn colder according to the most recent forecast by the National Oceanic Atmospheric Administration.  According to NOAA the weather is expected to be colder than normal over the next 8-14 days driving up heating demand.

Technicals

Prices reversed the prior day’s slide, bouncing from support which is an upward sloping trend line that connects the lows in February to the lows in March and comes in near 2.65. Resistance is seen near the 10-day moving average at 2.725. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The RSI is chopping sideways which reflects consolidation. The current reading of 44 is in the middle of the neutral range and reflects consolidation.

Consumption in end-use demand sectors increases

Consumption in end-use demand sectors increases. With colder temperatures in many parts of the Lower 48 states, total U.S. consumption of natural gas rose by 5% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 4% week over week. Industrial sector consumption increased by 2% week over week. In the residential and commercial sectors where natural gas use for space heating is common, consumption increased by 9%. Natural gas exports to Mexico decreased 1%.