Natural gas prices tumbled to support levels, following an increase in the number of gas and oil rigs reported on Friday by Baker Hughes. Working gas in storage was in line with expectations according to the most recent EIA numbers. The EIA also predicts increasing natural gas production over the next 32-years.
Natural gas prices tumbled to support near and upward sloping trend line that comes in near 2.57. Prices have appeared to hold support, and a break would lead to target support near 2.35. Resistance is seen near the 10-day moving average at 2.90. Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.
Active Rig Counts Increased More than Expected
Baker Hughes reported that the number of active oil and gas rigs increased by 29. This brings the total number of oil and gas rigs to 975, which is an addition of 234 rigs year over year. The number of oil rigs in the United States rose this week by 26 with the number of gas rigs increasing by 3. The number of oil rigs now stands at 791 versus 591 a year ago. The number of gas rigs in the US now stands at 184, up from 149 a year ago.
Storage Declined inline with Expectations
Working gas in storage was 2,078 Bcf as of Friday, February 2, 2018, according to EIA estimates. This represents a net decrease of 119 Bcf from the previous week. Stocks were 503 Bcf less than last year at this time and 393 Bcf below the five-year average of 2,471 Bcf. At 2,078 Bcf, total working gas is within the five-year historical range.
The EIA Predicts Production will Continue to Rise
EIA’s Annual Energy Outlook 2018 released on February 6, projects U.S. dry natural gas production to generally increase through 2050 in all cases. Production over the projection period (2018–2050) is expected to average 2.8 trillion cubic feet per year higher than levels projected in a similar case in last year’s AEO.
This article was originally posted on FX Empire
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