Natural Gas Price Prediction – Prices Drop as Demand Declines

Natural gas prices dropped on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 87 Bcf draw in stockpiles, according to survey provider Estimize. Colder than average weather is expected to move down into the center of the United States over the next 2-weeks. The weather will remain warmer than normal on the East Coast. Natural gas consumption declined for the second consecutive week.

Technical Analysis

On Wednesday, natural gas prices dropped, declining 5%. Prices slipped through support near the 10-day moving average at 3.86. Target support is seen near the December lows at 3.61. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This situation 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).

Demand Declines

U.S. natural gas consumption decreases across most sectors for the second consecutive week. The total U.S. consumption of natural gas fell for the second week in a row, by 1.4% compared with the previous report week. For two consecutive weeks, natural gas consumption fell in all sectors except power generation, where consumption was relatively flat, rising less than 1% week over week.