Natural Gas Price Predication – Price Rebound But Fail At Resistance

Natural gas prices rebounded 2.6% on Tuesday recapturing most of Monday 3% decline. Prices where unable to pierce through resistance level and are still likely rangebound. Colder than normal weather is expected to cover most of the Mid-west and east coast over the next 6-10 days but then the weather is expected to warm leaving most of the country with normal weather. Post tropical cyclone Vincent is making its way east over Mexico and could generate a minor disturbance in the Gulf of Mexico. Colder than normal weather last week increased heating demand by 73% which was offset by electrical generation demand according to data from the the Energy Information Administration.

Technical Analysis

Natural gas prices rebounded 2.6% but was unable to take out resistance near the 10-day moving average at 3.227. Support on natural gas is seen near the 50-day moving average at 3.01. Momentum on natural gas prices 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). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices for natural gas.

Demand Begins to Increase as the Weather Turns Colder

Demand increases as temperatures fall. Total U.S. consumption of natural gas rose by 6% compared with the previous report week, according to data from the Energy Information Administration. In the residential and commercial sectors, consumption increased by 73% as temperatures fell to unseasonably cold levels in many parts of the country. At the same time, natural gas consumed for power generation declined by 18% as cooling demand receded. Industrial sector consumption increased by 5% week over week. Natural gas exports to Mexico decreased 5% during the report week.