Natural Gas Price Prediction – Prices Drop Led by Declining Demand

Natural gas prices dropped on Tuesday driven by a report that showed declines in demand. This comes as the weather is expected to warmer than normal over the next 6-10 and 8-14 days according to the latest report from the National Oceanic Atmospheric Administration. While drilling rigs are likely to decline, the potential drop in demand is weighing on prices.

Technical Analysis

Natural gas prices dropped 4%, pushing through support which is former resistance the 10-day moving average at 1.68. Support is seen near the April lows at 1.52. Momentum is mixed. Short term momentum is negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is positive, but the trajectory of the MACD histogram is downward sloping which points to consolidation.

Demand falls, driven by lower demand for space heating. Total US consumption of natural gas fell by 6% compared with the previous report week, according to data from the EIA. In the residential and commercial sectors, consumption declined by 15% amid seasonal spring temperatures. Natural gas consumed for power generation was flat, averaging 26.0 Bcf per day. Industrial sector consumption decreased by 5% week over week. Natural gas exports to Mexico decreased 10% as NET Mexico underwent annual maintenance.