Natural Gas Price Prediction – Prices Drop Despite Brewing Storms

Natural gas prices moved lower on Tuesday, reversing Monday gain. Prices dropped 3.5%, ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 78 Bcf build in stockpiles according to survey provider Estimize. The weather is expected to be warmer than normal on the coasts and cooler than normal in the mid-section, for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration. Tropical storm bill is headed up the east coast and likely to hit Canada. There is a disturbance in the Gulf of Mexico that has a 40% chance of becoming a tropical cyclone during the next 48-hours according to NOAA. Solid retail sales of electricity should buoy natural gas prices

Technical Analysis

Natural gas pulled back after breaking out on Monday. Target resistance is seen near the October 2020 highs at 3.39. Support is seen near the 10-day moving average at 3.16. Short-term momentum flip-flopped and turned negative as the fast stochastic generated a crossover sell signal in overbought territory. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs when 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).

Electricity Sales Should Rise

The Energy Information Administration forecast that retail sales of electricity in the United States will increase by 2.3% in 2021 after falling by 3.9% in 2020. The largest increase in consumption will occur in the residential sector.