Natural Gas Price Prediction – Prices Consolidate With a Cold Weather Treat Lingering

Natural gas prices moved slightly lower on Friday forming an inside day. Prices appear to be forming a bottom. Large production gains are somewhat offset by the potential for increased heating demand. Colder than normal weather is expected to cover most of the United States, with much below normal weather throughout the mid-west. There is a tropical depression in the Gulf of Mexico, but it is expected to be downgraded on Friday. Blackouts in California due to the potential that electricity could generate a fire, is buoying the demand for natural gas generators. This could be another outlet for off-the-grid electricity.

Technical Analysis

Natural gas prices eased forming a doji day which is a lower high a higher low. This is a sign of consolidation. Resistance is seen near the October highs at 2.38. Support is seen near the 10-day moving average at 2.29. Short term momentum has is whipsawing but has turned negative after a recent crossover buy signal. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD trajectory is printing near the zero index level with a flat trajectory that points to consolidation.

Production Accelerates Buoying Supply

The Energy Information Administration reported that supply is rising as production growth continues. The EIA states that the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1% compared with the previous report week. The average net imports from Canada decreased by 3% from last week. Despite robust supply, inventories rose less than expected in the latest week. Net injections into storage totaled 87 Bcf for the week ending October 18, compared with the five-year average net injections of 73 Bcf and last year’s net injections of 62 Bcf during the same week.