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Natural Gas Price Prediction – Prices Continue to Fall Despite Flat Supply

Natural gas prices continue to slide
David Becker

Natural gas prices continued to slide declining 1.4% on Tuesday following a 5.5% decline on Monday. Prices have been on the defensive as warmer than normal weather is expected to cover most of the east coast for the next 6-10 and 8-14 days. The warm weather is expected to reduce natural gas demand, which should turn the trajectory of inventory draws upward.

 

Technicals

Natural gas prices continued to slide on Tuesday follow a sharp drop on Monday, closing at the lowest levels seen since August. Support is seen near the December lows at 2.15 and then again at a weekly upward sloping trend line that comes in near 2.05. Short-term resistance near the 10-day moving average at 2.28.  Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in the middle of the neutral range. Medium-term momentum has also 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 the red with a downward sloping trajectory which points to lower prices.

Production Unchanged

Supply is flat week over week according to the Energy Information Administration. The EIA report that the average total supply of natural gas remained the same as in the previous report week, averaging 100.6 Bcf per day. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada increased by 17% from last week.

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