Advertisement
Advertisement

Natural Gas Price Prediction – Prices Drop Despite Uptick in Demand

By:
David Becker
Published: May 3, 2019, 19:42 UTC

Stronger than expected inventories weigh on prices

Natural gas daily chart, May 02, 2019

Natural gas prices moved lower dropping 1.16% on Friday as traders finally incorporated the larger than expected build in inventories reported by the Department of Energy on Thursday. Supply overall was flat but demand this past week picked up according to the EIA. The weather is expected to be colder than normal through out most of the mid-west and the east coast according to the National Oceanic Atmospheric Admnistration.

Technical Analysis

Natural gas prices moved lower on Friday, but held above support near near a horizontal trend line at 2.53. This coincides with the 10-day moving average. Short term resistance is seen near the May high at 2.56. Short term momentum is negative the fast stochastic generated a crossover sell signal. The current reading of the fast stochastic is 56, which is in the middle of the neutral range and reflects consolidation. Medium term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as 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). The MACD histogram also generated a buy signal, but the trajectory of the MACD signal line is flat which reflects consolidation.

Supply Declined More Than Noral

Supply dropped according to data from the EIA. 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 4% from last week. Demand rose driven by residential and commercial sectors. Total U.S. consumption of natural gas rose by 6% compared with the previous report week, according to data from th EIA. Natural gas consumed for power generation climbed by 7% week over week. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 13%.

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.

Did you find this article useful?

Advertisement