Natural gas prices rebounded sharply on Thursday ahead of Friday’s inventory report scheduled to be released one day late due to the Christmas Holiday. Expectations are for natural gas inventories to decline by 119 Bcf according to survey provider Estimize. Demand moved higher in the latest week due to rising power generation. The weather is expected to be warmer than normal during the next 6-10 days and then turn to move normal levels during the next 8-14 days according to the National Oceanic Atmospheric Administration.
Technicals
Natural gas prices rebounded sharply on Thursday rising 4.6% and running into resistance seen near the 10-day moving average at 2.28 which coincides to the most recent breakdown level. Support is seen near the December lows at 2.156. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the red with a rising trajectory which points to consolidation. Traders will be looking for prices to retest the lows, and if it holds, there will be the opportunity to test higher levels especially if the weather turns colder.
Demand Rises as Power Generation Increases
Demand rises, driven by power generation. Total 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 7% week over week. Industrial sector consumption increased by 5% week over week. In the residential and commercial sectors, consumption increased by 7%. Natural gas exports to Mexico were the same as last week, averaging 5.3 Bcf per day.
