Natural Gas Price Prediction – Prices Drop as the Dollar Rises

Natural gas prices tumbled on Tuesday declining nearly 5% as warmer than normal weather is expected to cover most of the United States for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration. Additionally, the dollar moved higher on Tuesday surging which put downward pressure on the commodity complex. Since natural gas prices are quoted in dollars a stronger dollar makes commodities less valuable in other currencies. Petroleum prices were also under pressure as crude oil prices tumbled 5% to a fresh 4-year low. The drilling rig count in natural gas fell one rig in the latest week. Net withdrawals of stockpiles are expected to continue to ease less than normal which could generate headwinds for prices.

Technical Analysis

Natural gas prices moved lower on Tuesday declining nearly 5% and falling for a second consecutive trading day. Resistance is seen near the 10-day moving average seen near 1.82. Support is seen near the March lows at $1.61. Momentum is about to turn negative as the MACD (moving average convergence divergence) index is poised to generate 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 fast approaching the zero index level which would also signify a crossover sell signal.

The EIA reported that net withdrawal from storage totaled 48 Bcf for the week ending March 6, compared with the five-year average net withdrawal of 99 Bcf and last year’s net withdrawal of 164 Bcf during the same week. Working natural gas stocks totaled 2,043 Bcf, which is 227 Bcf more than the five-year average and 796 Bcf more than last year at this time.