Natural Gas Price Analysis for March 22, 2018
Natural gas prices moved lower on Wednesday despite a rally in crude and heating oil. Prices were under pressure despite a forecast from the National Oceanic Atmospheric Administration forecast that the weather will be colder than normal for the next 8-14 days. Colder than normal weather will increase heating demand driving up the demand for natural gas. A softer than expected heating oil demand figure ahead of Thursday’s natural gas inventory report, took some of the momentum out of natural gas prices.
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Technicals
Natural gas prices moved lower dropping back to support near an upward sloping trend line that comes in near 2.64. Resistance is seen near the 10-day moving average at 2.71. 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 MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices for natural gas.
Heating Oil Demand Edged Lower
Aggregate demand for petroleum products was higher, according to the EIA report, but product demand was mixed. Total products demand over the past month averaged 20.5 million barrels per day, up by 4.9% from the same period last year. Over the month, gasoline demand averaged about 9.3 million barrels per day, up by 1.9% from the same period last year. Distillate fuel demand surprised moving lower by 4.5%, averaging 3.9 million barrels per day over the month. Jet fuel demand was higher up 4.8% compared to the same period last year.
Canadian imports drive supply increases
Canadian imports drive supply increases. According to data from the EIA, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 13% from last week.