Natural Gas Price Prediction – Prices Drop but Hold Support

David Becker

Natural gas prices dropped on Monday losing more than 3% and slipping down to support, despite a smaller than expected draw in natural gas inventories reported last week. Prices bounced at support, even though the weather is expected to be warmer than normal over the next 8-14 days according to NOAA.

Technical Analysis

Natural gas prices slipped to support seen near a horizontal trend line that comes in near 2.90. Resistance is seen the 10-day moving average at 3.23. Short term momentum reversed and is negative as the fast stochastic generated a crossover sell signal. The fast stochastic is printing a reading of 7, below the oversold trigger level of 20 which could foreshadow a correction. Momentum as reflected by the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Supply falls

The EIA reports that the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 3% from last week. Demand falls, driven by decline in residential and commercial consumption. Total U.S. consumption of natural gas fell by 16% compared with the previous report week, according to the EIA. The largest decrease in consumption came in the residential and commercial sectors, where natural gas use declined by 25% with warmer-than-normal weather across the Lower 48 states. Natural gas consumed for power generation declined by 11% week over week. Industrial sector consumption decreased by 3% week over week. Natural gas exports to Mexico decreased 2%.

The EIA Reported that Inventories Declined Less than Expected

The EIA reported on Friday that working gas in storage was 2,705 Bcf. This represents a net decrease of 20 Bcf from the previous week. Expectations were for a decline of 48 Bcf. Stocks were 450 Bcf less than last year at this time and 560 Bcf below the five-year average of 3,265 Bcf. At 2,705 Bcf, total working gas is below the five-year historical range. The 5-year average of prices is 3.07.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.