Natural Gas prices moved higher on Tuesday and seemed to gain traction in sympathy with crude oil. Saudi Arabia announced that it was cutting output as a favor to the market and a new years gift. The weather is expected to be warmer than usual throughout most of the north U.S. States and colder than average throughout the south. Supply declined in the latest week.
Natural gas prices rose 4% on Tuesday an are poised to test resistance near the mid-December highs at 2.77. A break of this level would lead to a test of the 50-day moving average near 2.83. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). Short-term momentum has also turned positive as the fast stochastic recently generated a crossover buy signal. The current reading on the fast stochastic is 83, above the overbought trigger level of 80, which could foreshadow a correction.
According to data the EIA the average total supply of natural gas fell by 0.1% compared with the previous report week. Dry natural gas production grew by 0.5% compared with last week report. Average net imports from Canada decreased by 8.4% from last week, but imports from Canada reached the highest daily level—6.5 Bcf/d on December 16.