Natural gas prices rebounded on Thursday as the dollar moved lower and buoyed the energy sector. Prices still remain in a downtrend despite an increase in natural gas-fired generation in the US in the first half of 2020. There is a new low-pressure system entering the Gulf of Mexico which has a 30% chance of turning into a tropical cyclone according to the NOAA. The weather is expected to remain warmer than normal over the next two weeks.
Natural gas prices moved higher on Tuesday rising 1.6% but remaining in a downtrend. Resistance is seen near the 10-day moving average at 1.74. Support is seen near the July lows at 1.60. Medium term momentum is negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal.
Natural Gas Generation Increased in the H2 of 2020
Natural gas-fired generation in the US rose 9%, in the first half of 2020. Natural gas was the fastest-growing source of electric power generation, according to data from the EIA. The increase in natural gas-fired generation, which is the result of recent low prices and natural gas-fired power capacity additions, comes despite a 5% decline in total electricity generation. The decrease in electricity consumption is partially attributable to reduced business activity as a result of COVID-19 mitigation efforts.
This article was originally posted on FX Empire
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