Natural Gas Prices Fall After Reaching New 13-Year Highs

Tips

• Natural gas prices reached a new intraday high of 13 years.

• Arrivals of natural gas at LNG terminals decreased.

• The weather in the mid-West is forecast to be colder than typical.

Natural gas prices reached a 13-year high before whipsawing and settling down for the session. While demand continues to be strong, natural gas arrivals at LNG facilities decreased. Natural Gas Intelligence reports that arrivals were the lowest in two weeks. A snowstorm will dump considerable amounts of snow on the higher plains.

The weather in the mid-West is predicted to remain significantly colder than average over the next 6-10 days, then moderate slightly over the next 8-14 days, although still significantly colder than average. This scenario will result in an increase in the need for heating.

Technical Evaluation

Natural gas prices set a new intraday high, surpassing the previous 13-year record, but then whippedsawed as speculators took profits. Near the July 2008 highs of 13.68, the target resistance is visible. At 6.07, support is located near the 10-day moving average.

Short-term momentum has shifted negative as a crossing sell signal was triggered by the fast stochastic. Prices are excessively high. The fast stochastic is printing a reading of 85, which is above the overbought threshold of 80. Additionally, the RSI is reading 78, exceeding the overbought trigger threshold of 70.

The medium-term trend has shifted to the positive. The MACD (moving average convergence divergence) histogram is in positive territory with an upward sloping trend, indicating that the underlying price of natural gas is accelerating.