Natural Gas Price Prediction – Prices Drop Ahead of Inventory Report

Natural gas prices tumbled on Wednesday ahead of Thursday’s inventory report from the Energy Information Administration. Expectations are for natural gas inventories to rise by 98 Bcf according to survey provider Estimize. This follows a 70 Bcf build in stockpiles last week. The weather is expected to be much warmer than normal on the west coast and much cooler than normal on the east coast according to the most recent report from the National Oceanic Atmospheric Administration. Electricity demand drops, driven by declines in New York, which weighed on natural gas prices.

Technical Analysis

Natural gas prices whipsawed, tumbling more than 9% after breaking out above trend line resistance on Tuesday. This negative reaction to a breakout can only be categorized as a fake-out or false break out. Those who entered on Tuesday’s close were sideswiped. Short term momentum turned negative as the fast stochastic generated a crossover sell signal. This follows a buy signal created on Tuesday. Medium-term momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation.

Electricity Demand Drops Weighing on Natural gas Consumption

The EIA reports that the decline in business shutdowns and changes to normal routines related to mitigation efforts for the 2019 novel coronavirus disease has caused daily electricity demand in New York state to decrease by 11%–14% in March and April compared with expected demand. Unfortunately, this issue is playing out in many demand centers including San Francisco, Washington DC, Boston, Philadelphia, and Chicago.