Natural Gas Price Prediction – Prices Slide as Momentum Turns Negative

Natural gas prices slumped on Friday as warmer than normal weather is forecast to cover most of the United States for both the 6-10 and 8-14 day forecast. Despite a larger than expected draw in inventories reported on Thursday and total inventories that are well below the 5-year average, prices are trading under pressure.

Technical Analysis

Natural gas prices slipped on Friday dropping nearly 2%, and falling to support near the March lows at 2.76. Short term resistance is seen near the 10-day moving average at 2.83. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The stochastic trajectory is printing in the red with a downward sloping trajectory which points to lower prices.

Medium term momentum has turned negative as the MACD (moving average convergence divergence) index recently 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). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Supply falls as imports Decline

Supplies declined according to the EIA. The DOE reported that the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 11% from last week, led by a 50% decline during the report week in imports. An increase in US exports into Canada this report week also contributed to the decline in net Canadian imports.

The EIA reports that demand fell, driven by residential and commercial sectors. After heightened demand for space heating with cold weather during the last report week, total US consumption of natural gas fell by 19% week on week, according to data from the EIA. In the residential and commercial sectors, consumption declined by 26%. Natural gas consumed for power generation declined by 15% week over week. Industrial sector consumption decreased by 8% week over week.