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Natural Gas Price Prediction – Prices Consolidate but the Trend is Higher

By:
David Becker
Published: Jan 15, 2019, 18:19 UTC

Natural gas prices whipsawed consolidating Monday’s gain as colder than normal weather continues to forecast higher heating demand.  The weather over the

Natural Gas

Natural gas prices whipsawed consolidating Monday’s gain as colder than normal weather continues to forecast higher heating demand.  The weather over the next 2-weeks is expected to be much colder than normal throughout most of the mid-west according to the latest forecast from the National Oceanic atmospheric Administration.  Supplies of natural gas are rising but they are offset by higher LNG exports. The cold weather will continue to add to the upside risks.

Technical Analysis

Natural gas prices made a higher high and a higher low which reflects an uptrend. Prices ran into resistance which is the first Fibonacci retracement level near 3.65. Support is seen near the 10-day moving average at 3.05. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Supplies increased according the EIA. The average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 18% from last week as U.S. imports from Canada increased while U.S. exports to Canada declined.

Exports Hit a Record in December which Adds to Demand

U.S. LNG exports reach new record high. U.S. LNG exports in December 2018 set another record, with 36 exported cargoes, after Train 5 at Sabine Pass and Train 1 at Corpus Christi began producing LNG and shipped their first cargoes, according to the EIA. Currently, seven liquefaction trains are operating in the United States across three facilities, five trains at Sabine Pass, one at Cove Point, and one at Corpus Christi. Three more liquefaction projects, which is Cameron LNG, Elba Island, and Freeport are expected to enter service in 2019.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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