Natural Gas Price Prediction – Prices Break Out on Warm Weather Forecast

Natural gas prices broke out on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a35 Bcf build in stockpiles, according to survey provider Estimize. Last week the EIA inventory report came in at the same level. The weather is expected to remain much warmer than normal in the North East, followed by above-normal temperatures for the next 8-14 days. There are currently 2-storms in the Atlantic that have a zero-percent chance of becoming a tropical cyclone over the next 48-hours.

Technical Analysis

Natural gas prices broke out and strong momentum and should continue to test higher prices. The weekly chart of natural gas shows that it has target resistance near $4.92, which is another 17% higher. Support is seen near the 10-week moving average at 3.63. Weekly momentum is positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is also positive as the weekly MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Demand Remains Strong

The electric power sector drove U.S. consumption of natural gas increases. According to the EI total U.S. consumption of natural gas rose by 3.6% compared with the previous report week’s increase of 1.5%. Natural gas consumed for power generation climbed by 5.8% week over week, or 2.2 Bcf per day, nearly matched by a 5.7% increase, or 0.4 Bcf per day, in consumption in the residential and commercial sectors.