Natural Gas Price Prediction – Prices Slide Forming Outside Day

Natural gas prices moved lower on Tuesday following the long holiday weekend. Prices ran up into the close on Friday, but profit-taking weighed on prices, and they generated an outside reversal day. The weather is expected to be warmer than normal over both the 6-10 and 8-14 day periods. There is a disturbance in the Gulf of Mexico which has a 30% chance of becoming a tropical cyclone over the next 48-hours. Hurricane Larry is headed for Bermuda and is unlikely to impact any natural gas installations.

Technical Analysis

Natural gas prices moved lower, forming an outside day: a high high, a lower low, and a lower close. This is generally considered a reversal day. Support is seen near the 10-day moving average at 4.36. Resistance is seen near the 2018 highs at 4.85. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are oversold. The fast stochastic is printing a reading of 81, above the overbought trigger level of 80 and could foreshadow a correction.

Consumption Declined in Latest Week

Average U.S. natural gas consumption decreases compared with previous report week due to lower demand for electric power generation. Average total U.S. consumption of natural gas fell by 1.4%, or 1.0 Bcf per day, compared with the prior report week. Natural gas demand for power generation fell by 2.3%, or 0.9 Bcf per day, as temperatures moderated near the end of the report week across the central and northeastern United States.