Natural Gas Price Predication – Prices Edge Higher Ahead of Inventory Report

Cold weather continues to buoy prices
David Becker
Natural gas daily chart, February 27, 2019

Natural gas prices edged higher after starting the trading session in the red. Prices gained traction throughout the trading session, and rallied into the close. Colder than normal weather is now expected to cover most of the United States for the next 2-weeks. The 6-10 day forecast is much colder than the 8-14 day forecast. The Energy Information Administration is scheduled to report its natural gas inventory report on Thursday. Expectations are for a 162 Bcf declined according to estimize.

Technical  Analysis

Natural gas prices edged higher closing just below resistadnce near former support at 2.87. Suport is seen near the 10-day moving average at 2.68. If prices can close above 2.87 that will begin to trade in a new range capped at 3.62. 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. Short term prices are overbought. The fast stochastic is printing a reading of 84, above the overbought trigger level of 80 which could foreshadow a correction.

Exports are Rising

U.S. LNG exports increase week over week, according to the EIA. Nine LNG vessels with a combined LNG-carrying capacity of 32.8 Bcf departed the United States from February 14 to February 20. Natural gas feedstock deliveries to the Corpus Christi terminal have averaged 0.7 Bcf per day since February 15, according to the EIA, as the facility prepares to enter commercial service on February 25.

Higher Yields are Good for Commodities

Easier money will help buoy natural gas prices. Fed Chair Powell said that we are close to agreeing on a plan which would be the end of the bond purchase process. The Fed is reducing the bond holdings by allowing a maximum of $50 billion in proceeds to roll off each month and reinvesting the rest. Powell added that he expects the reduction to end sometime later this year.

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