Natural Gas Price Prediction – Price Plunge on Warmer Weather Forecast

Natural gas prices tumbled on Monday dropping 3%. Prices attempted multiple times to push through resistance as colder than normal weather spread across most of the United States. The weather pattern has eased and temperatures have moderated.  Over the next 6-10 days, the weather will essentially be normal. The next 8-14 day forecast is expected to be colder than normal according to the National Oceanic Atmospheric Administration. Net withdrawals last week were larger than expected, keeping the inventory levels below the average of the 5-year range.

Technical Analysis

Natural gas prices tumbled on Monday, sliding to the lowest level seen in March. Resistance is seen near the February highs at 2.90. Support is seen near the February lows at 2.54. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 52-which is in the middle of the neutral range.

Withdrawals Where Larger than Expected

The EIA reported that net withdrawals from storage totaled 149 Bcf for the week ending March 1, compared with the five-year average net withdrawals of 109 Bcf and last year’s net withdrawals of 60 Bcf during the same week. Expectations were for net withdrawals to decline by 141 Bcf. Working gas stocks totaled 1,390 Bcf, which is 464 Bcf lower than the five-year average and 243 Bcf lower than last year at this time.

U.S. LNG exports flat week over week, according to the EIA. Eight LNG vessels with a combined LNG-carrying capacity of 28.8 Bcf departed the United States from February 28 to March 6, according to shipping data. Kinder Morgan’s Elba Island LNG project in Georgia received approval to introduce feed gas, back-up fuel, and boil-off gas, according to a FERC filing. This week, Cheniere Energy, an LNG producer announced substantial completion of Corpus Christi Train 1. The first commercial delivery from Train 1 is expected in June 2019. Train 2 is currently being commissioned, with the first expected production of LNG in April 2019.