Natural gas prices continued to chop sideways, rising on Tuesday as warmer than normal weather is expected to cover most of the U.S. over the next 2-weeks. Despite the lackluster demand seen in the first 4-months of 2021, electrical generation for electricity has also declind allowing prices to remain stable.

Technical Analysis

Natural gas prices moved higher on Tuesday but continue to trade in a tight range. Prices moved back above resistance which is now support near the 10-day moving average at 2.94. Target resistance is seen near the February highs at 3.06. Target support is seen near the 50-day moving average at 2.74. Short-term momentum has flipflopped and turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Natural Gas Fired Electricity Generation Declines

According to data from the EIA, in the first four months of 2021, natural gas-fired generation in the Lower 48 states averaged 3,394 gigawatthours per day. This is a decline of nearly 7% compared with the same period a year ago. This year’s decline is the first year-over-year decline in natural gas generation during this period since 2017. The decline in natural gas-fired generation is a result of higher natural gas prices and increased competition from renewables. Total electricity generation during the period increased 6.6% compared with 2020, which is primarily attributable to colder winter weather.

This article was originally posted on FX Empire

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