Natural Gas Price Prediction – Prices Consolidate as Short Covering Subsides

Managed money covers 72K contracts in the latest week
David Becker
Oil pipeline – concept

Natural gas prices continued to face downward pressure on Tuesday as warmer than normal weather is expected to cover most of the United States for the next 6-10 and 8-14 days. There are no disturbances in the Atlantic or Gulf of Mexico that are expected to turn into a tropical cyclone. Most of the short-covering is likely complete. According to the most recent commitment of trader’s report released for the date ending November 5, 72K contract were bought back by managed money that was short futures and options. Approximately 10K contracts were added to long positions. Open interest that is short futures and options in the managed money category outnumber longs by nearly double. LNG exports out of the US decline week over week according to the EIA.

Technical Analysis

Natural gas prices continued to face downward pressure but appear to have held support at the 50-day moving average at 2.62. A break of this level would see a test of the October lows at 2.38. Resistance is seen near the 10-day moving average at 2.74. Short term momentum is turning negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in red with a declining trajectory which points to lower prices.

LNG Exports Decline

The EIA reported that US LNG exports decrease week over week. Twelve LNG vessels with a combined LNG-carrying capacity of 43 Bcf departed the United States between October 31 and November 6, according to the EIA. One vessel was loading at the Sabine Pass terminal on Wednesday. On November 4, the 1000th LNG export cargo was shipped from the United States since the start of LNG exports from the Lower 48 states in February 2016. An estimated 3.42 trillion cubic feet of natural gas have been exported as LNG from the United States between February 2016 and November 6, 2019.

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