Natural gas prices dropped nearly another 2% on Tuesday after falling 5% on Monday. The move comes as warmer than normal weather is expected to cover most of the United States for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration. U.S. demand declines again week over week due to mild temperatures. The combination of warm weather and larger-than-expected injections is weighing on prices.
Natural gas prices dropped on Tuesday falling more than 2% after declining rapidly on Monday and pushing through support which is now resistance near the 10-day moving average at 2.57 which is now seen as resistance. Target support is seen near the March lows at 2.42. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.
U.S. Demand Declines Because of Warmer Weather
U.S. demand declines again week over week due to mild temperatures. Total U.S. consumption of natural gas fell by 6.0% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed 1.4% week over week. Industrial sector consumption decreased 1.9% week over week. The largest decrease in consumption came from the residential and commercial sectors, where consumption declined by 17.1% due to above-average temperatures and low heating demand in the eastern United States for much of last report week.