Natural Gas Prices Continue to Rise, Reaching a Multi-Month High

Significant Insights

• Natural gas prices have surged significantly.

• Prices finished close to a four-month high.

• The weather is forecast to be typical.

Natural gas prices spiked on Wednesday, ahead of the Energy Information Administration's inventory update on Thursday. Estimize, a survey provider, anticipates a 14 Bcf drop in inventories. The weather is forecast to remain normal during the next six to ten and eight to fourteen days, with high temperatures along the Atlantic and Pacific coasts.

Residential and commercial sectors drive reduce natural gas consumption in the United States. Natural gas usage in the United States decreased by 18.6 percent in the previous report week. Week over week, natural gas use for power generation decreased by 7.0 percent. Consumption in the industrial sector declined by 5.5 percent. Consumption fell by 37.1 percent in the residential and commercial sectors.

Technical analysis

Natural gas prices finished at a multi-month high on Wednesday and are ready to test new highs. Near the October highs of 6.46, resistance is present.

The short-term momentum indicator has turned positive as a crossing buy signal was given by the fast stochastic. Prices have re-entered overbought territory, with the Fast Stochastic reading 93, exceeding the overbought trigger level of 80.

The medium-term trend has shifted to the positive. The MACD (moving average convergence divergence) indicator generates a buy signal upon crossover. This occurs when the MACD line (the 12-day moving average divided by the 26-day moving average) crosses over the MACD line's 9-day moving average.