Natural Gas Price Prediction – Prices Drop Ahead of EIA Inventory Report

Natural gas prices broke down through the contract lows and continue to decline following a report that showed that warmer than normal weather is expected to cover most of the east coast for the next 8-14 days. This comes ahead of Friday’s inventory report from the Energy Information Administration which is expected to show that inventories declined by 83 Bcf according to survey provider Estimize. This follows last weeks 107 Bcf draw which was larger than expected. The warm weather during the heart of the cooling demand season is putting a damper on prices decline a decline in drilling activity. The EIA reported that LNG exports increased week over week.

Technicals

Natural gas prices dropped 2.6% on Thursday, ahead of Friday’s inventory report. Prices pushed through the December continuation contract lows at 2.15, which is now seen as short term resistance. Additional resistance is seen near the 10-day moving average near 2.23. Support on natural gas prices can be seen by looking at a long term trend line on a weekly chart that comes in near 2.07. weekly momentum has now turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occur as the MACD index (the 12-week moving average minus the 26-week moving average) crosses below the MACD signal line (the 9-week moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

US LNG Rises

The EIA reported that LNG exports increase week over week. Seventeen LNG vessels with a combined LNG-carrying capacity of 59 Bcf departed the United States between December 12 and December 18, according to shipping data compiled by the EIA. Three vessels were loading on Wednesday. Elba Island shipped its first LNG export cargo on December 13.