Natural Gas Price Prediction – Prices Drop as LNG Exports Slow

Natural gas prices tumbled on Monday dropping 2.6%, and poised to test the 2019 lows. Prices are under pressure as falling natura las prices in Asia, are making exports of LNG not sustainable. Warmer than normal weather in China during the winter has put downward pressure on Asian prices. Historically, natural gas prices in the US were driven by domestic supply and demand. Supply is on the rise, especially now that Chevron has entered the shale space by purchasing Anadarko. Supply will likely increase and export demand that was keeping prices buoyed has slipped due to prices in Asia.

Technical Analysis

Natural gas prices tumbled 2.6% on Monday and is poised to test the February lows at 2,54. Resistance is seen near the 10-day moving average at 2.67. Momentum has 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 and accelerating negative momentum. The fast stochastic also generated a crossover sell signal, which points to accelerating negative moemtnum. The current reading on the fast stochastic is 2, which is below the oversold trigger level of 20, and could foreshadow a correction.

Supply declined in the latest week according to data from the EIA. The the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada decreased by 1% from last week.  Demand declined  driven by residential and commercial sectors. Total US  consumption of natural gas fell by 10% compared with the previous report week, according to data from the EIA. Decreases were largest in the residential and commercial sectors, where consumption declined by 25%. Natural gas consumed for power generation climbed by 4% week over week. Industrial sector consumption decreased by 5% week over week.