Natural Gas Price Prediction – Prices Breakdown and Continue to Head South

Natural gas prices at henry hub continued its march lower on Tuesday, breaking down below contract low and dropping nearly 3%. Warmer than normal weather is expected to cover most of the United States for both the 6-10 and 8-14 day forecast according to the National Oceanic Atmospheric Administration.  Additionally, inventories are in the process of growing. Last week the US Department of Energy reported a larger than expected build in natural gas inventories, which has placed inventories back in the middle of the 5-yearar average range. Asian natural gas prices remain under pressure, which could curtail US exports, although exports of LNG increased week over week according to the Energy Information Administration.

Technical Analysis of Natural Gas

Natural gas prices broke down further on Tuesday after forming a brief bear flag pattern which is a pause that refreshes lower. Prices pushed through the contract low of 2.48 and are now poised to test the 2016 lows at 1.65. Resistance is seen near the former breakdown level which is 2.55. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram, is printing int he red with a declining trajectory which points to stable negative momentum.

The fast stochastic has also generated a crossover sell signal which reflects accelerating negative momentum. This comes despite the fast-stochastic printing a reading of 2.5, which is well below the oversold trigger level of 20 which could foreshadow a correction.

LNG Exports Increase Week of Week Despite Lowewer Asian LNG Prices

The Energy Information Administration reported that LNG exports increased week over week. They report that 8-LNG vessels with a capacity of 28.4 Bcf left the United States last week. Additional, the EIA reports that the FERC issued a noticed to Golden Pass Products to proceed with the initial site preparation for a combined LNG capacity center.