Natural Gas Price Prediction – Prices Bounce but Remain Under Pressure

Natural Gas fails to rally despite record daily consumption
David Becker
Natural Gas

Natural gas prices generated a dead cat bounce, and is hovering just above support levels. The polar vortex in the Midwest and Northeast that left in a hurry last week led to temperatures much colder than normal. According to data from the National Oceanic and Atmospheric Administration daily temperatures in the Lower 48 states averaged 28° Fahrenheit for the week ending January 31, which was 6°F lower than the 30-year average for the same period and 11°F lower than year-ago levels. Currently the weather is expected to be colder than normal through out the west coast and warmer than normal throughout the east coast.

Technical Analysis

Natural gas prices moved higher on Friday rising 1.75% but the bounce seem mild following days of lower prices. Support on natural gas is seen near the February lows at 2.55. Resistance is seen near the 10-day moving average at 2.74. Momentum remains negative as the MACD (moving average convergence divergence) histogram is printing in the red with a declining trajectory which points to lower prices. Short term prices are over sold. The fast stochastic is printing a reading of 6, below the oversold trigger level of 20 and could foreshadow a correction.

Cold Weather Generated a Record Level of Natural Gas Consumption

Cold weather and a polar vortex blanketed much of the Lower 48 states from January 29–31, resulting in record natural gas consumption in the United States. According to the EIA estimated total natural gas demand posted a new single-day record on January 30, topping the previous record set on January 1, 2018. Total estimated consumption by the power, industrial, and residential/commercial sectors and total estimated natural gas exports,by pipeline and as feedstock to liquefied natural gas (LNG) facilities, reached 145.9 billion cubic feet (Bcf) on January 30, compared with the previous record of 143.9 Bcf set in 2018, according to data from the Energy Information Administration.

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