Natural Gas Price Prediction – Natural Gas Rallies on Cold Weather Forecast

Natural gas prices moved higher on Friday following Thursday’s larger than expected decline in natural gas inventories.  Inventories declined by 163 Bcf compared to the 148 Bcf which was expected. The weather is expected to be colder than normal according to the latest forecast from the National oceanic Atmospheric Administration. Demand is on the rise and the weather is expected to produce greater than normal heating days over the next 2-weeks.

Technical Analysis

Natural gas prices moved higher on Friday making a higher high and a lower low and poised to test resistance near the 10-day moving average at 3.27. Support is seen near an upward sloping trend line that comes in near 2.87. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal.  Medium term momentum is flat as the MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat trajectory which points to consolidation.

Demand Continues to Rise as the Weather is Colder than Normal

Demand rises amid cold temperatures, which is boosting heating demand. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation was flat, averaging 25.3 Bcf per day. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 8% as cold temperatures spurred heating demand. Natural gas exports to Mexico increased 1%.

Supply falls during the latest week. According to data from the EIA, the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada decreased by 6% from last week.  Expectations are for supply to edge lower according to the latest down tick in the Baker Hughes Rig Count.