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Natural Gas Price Prediction – Prices Drop Despite Brewing Storms

By:
David Becker
Published: Sep 5, 2018, 19:33 UTC

Natural gas prices dropped on Wednesday slicing through trend line support and poised to test lower levels. Hurricane Florence is working its way through

Natural Gas

Natural gas prices dropped on Wednesday slicing through trend line support and poised to test lower levels. Hurricane Florence is working its way through the Atlantic and although there is currently no threat to the US, the trajectory of the storm has changed to a west north west slope.  There is a new tropical disturbance in the Atlantic off Africa. This disturbance has a 70% chance of become a storm up from 30% on Tuesday. The weather is expected to be warmer than normal over the next 8-14 days which should increase cooling demand.

Technical Analysis

Natural gas moved lower on Wednesday breaking through  trend line support which is now resistance near the 2.82 level. Target support is seen near an upward sloping trend line at 2.76. Momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the black with a downward sloping trajectory which points to lower prices.

Overall supply is flat

According to data from the EIA, the average total supply of natural gas remained about the same as in the previous report week, averaging 88.2 Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 5% from last week.

Overall demand is flat

Total U.S. consumption of natural gas was unchanged from the previous report week, averaging 62.3 Bcf/d according to data from the EIA. Natural gas consumed for power generation remained largely unchanged, averaging 35.0 Bcf per day. However, with mixed temperatures across the Lower 48 states, regional power demand varied; demand in the Northeast increased the most, averaging about 0.9 Bcf per day higher this week compared to last week, while demand in the West saw the largest declines, averaging about 0.7 Bcf per day lower this week compared to last week. Industrial sector consumption stayed constant, averaging 19.8 Bcf per day. In the residential and commercial sectors, consumption remained at last week’s level, averaging 7.5 Bcf per day. Natural gas exports to Mexico decreased 2%.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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