Natural Gas Price Prediction – Prices Drop as Demand Eases

Natural gas prices moved lower on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for inventories to rise by 104 Bcf according to Estimize. Last week inventories rose less than expected for the first time in a month. Still the trajectory of the inventory rise, and high levels of production along with near tariffs on LNG sent to China should cap prices.

Technical Analysis

Natural gas prices moved lower on Wednesday, falling 2.14% ahead of Thursday’s inventory report. Supoprt is seen near the 10-day moving average at 2.59. Resistance is seen near the 50-day moving average at 2.67. Prices might be forming a bottom. A smaller than expected rise in inventories could give prices the lift needed to pierce resistance. Short-term momentum has turned negative. The fast stochastic has generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 65, which is on the upper end of the neutral range. Medium term momentum is flat as the MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat trajectory which points to consolidation.

The EIA Reports that LNG Exports Declined

The EIA reported that US LNG exports dipped last week. They quote Bloomgerg in saying that 7-LNG vessels with a combined LNG-carrying capacity of 24.5 Bcf departed the United States from May 2 to May 8. A total of three vessels one at each terminal were loading at Sabine Pass, Corpus Christi, and Cove Points. China announced that beginning June 1, a tariff on LNG imported from the United States would carry a 25% tariff. This is killing the LNG industry, which relies on Asian imports to make their business profitable. LNG imports into the US are small scale, as the worlds largest natural gas producer. The tariffs will reduce Asian demand and cap prices of LNG.