Natural Gas Price Prediction – Prices Consolidate but Momentum is Shifting

Natural gas consolidated moving slightly higher before the July 4, break.  Warmer than normal weather is expected to cover most of the United States for the next 8-14 days increasing cooling demand which could see electricity blackouts.  While production remains solid, there is a need for substantial increases ahead of the drawing season in October.

Technicals

Natural gas prices attempted to rebound but remain below trend line resistance which is former support near 2.87.  Additional resistance on natural gas is seen near the 10-day moving average at 2.93. Support is seen near the May lows at 2.70.  Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. The fast stochastic also generated a crossover buy signal which reflects accelerating positive momentum and points to a rebound.

Warm Weather is Reducing Injections

Net injections into storage totaled 66 Bcf for the week ending June 22, compared with the five-year average net injection of 72 Bcf and last year’s net injections of 48 Bcf during the same week. Net injections averaged 9.6 Bcf/d and will have to average 13.3 Bcf/d for the remainder of the refill season to match the five-year average level of 3,815 Bcf by October 31. Working gas stocks totaled 2,074 Bcf, which is 501 Bcf lower than the five-year average and 735 Bcf lower than last year at this time, according to the EIA.

The EIA reported revisions to working gas levels in the South Central region increased working gas levels by 4 Bcf for the week ending July 15, 2018. As a result of these revisions, the net change for the previous report week changed from 91 Bcf to 95 Bcf. The weekly net change for the week ending June 22 was not affected by the revision. EIA last reported a revision for the week ending June 30, 2017.