Natural Gas Price Predication – Prices Continue to Rise as Inventories Fall

Natural gas prices continued to rise on Friday following Thursdays’ smaller than expected draw in natural gas inventories. Following the Department of Energy’s report, prices attempted to move higher but were met with resistance, until Friday when traders to prices higher. Support on natural gas is seen near the 10-day moving average at 2.76. Resistance is seen near the 50-day moving average at 2.85. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Despite an increase in dry production, total supply remains flat.

According to data from the Energy Information Administration, the average total supply of natural gas remained the same as in the previous report week, averaging 86.9 Bcf per day. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada decreased by 5% from last week.

Moderate Temperatures Take Their Toll on Demand

Total U.S. consumption of natural gas fell by 2% compared with the previous report week, according to data from the EIA. More moderate temperatures in the northern half of the Lower 48 states, primarily over the weekend, led to a 6% week-over-week decline in natural gas consumed for power generation. Residential and commercial consumption increased by 15% week over week. Industrial sector consumption increased by 1% week over week. Natural gas exports to Mexico decreased 1%.

Net injections fall lower than the five-year average for the fourth week in a row. Net injections into storage totaled 24 Bcf for the week ending July 20, compared with the five-year average net injections of 46 Bcf and last year’s net injections of 19 Bcf during the same week. Working gas stocks totaled 2,273 Bcf and are now 557 Bcf lower than the five-year average and 705 Bcf lower than last year at this time.