Natural Gas Price Analysis for March 19, 2018

Natural gas prices consolidated just above support levels, after dropping following Thursday’s smaller than expected decline in natural gas inventories.  Support on natural gas is seen near an upward sloping trend line that comes in near 2.66. Resistance is seen near the 10-day moving average at 2.74. Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The fast stochastic recently generated a crossover sell signal. The index has a negative trajectory which points to accelerating negative momentum and lower prices for natural gas. The relative strength index (RSI) moved sideways which reflects consolidation. The current reading of 44, is in the middle of the neutral range and also reflects consolidation.

Natural Gas Steal Market Share from Coal in Electrical Generations

According to the EIA, natural gas-fired generation gained market share in Texas, during the month of February. The share of generation from natural gas-fired power plants increased by 3.2% to almost 42% from January to February. This compares to a loss in coal fire generation which declined to 23% from 28% during the same period. The generation share from nuclear power plants increased by 1.1 percentage points while wind power plants increased by about 1.5 percentage points.

Canadian imports drive supply increases

According to data from the Energy Information Administration, 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.

Canadian Manufacturing Fell

Canada manufacturing shipments fell 1.0% in January, as expected, following a revised 0.1% dip in shipment values during December. An 8.0% tumble in motor vehicle and parts drove the decline in total shipments. The drop in motor vehicle and parts followed gains in November and December, and was due to lower production amid atypical plant shutdowns, according to Statistics Canada.