Natural Gas Price Prediction – Prices Drop as Rig Count Barely Drops

Natural gas prices dropped sharply on Friday declining by more than 4% and dropping for the 3^rd consecutive session. This following Thursday inventory report showed a larger than expected build in stockpiles. The weather is expected to become warmer than normal over the next 8-14 days on the east coast after being colder than normal for the next 6-10 days. The total active rig count, fell by 34 to a record low of 374 in the week to May 8, according to energy services firm Baker Hughes. Natural gas rigs fell by 1, oil fell by 33.

Technical Analysis

Natural gas prices continued to move lower dropping another 4.4% following a drubbing on Thursday and Wednesday that saw natural gas fall more than 11%. Support is seen near the April 27 low at 1.76. Resistance is seen near the 50-day moving average at 1.88. Short term momentum turned negative as the fast stochastic generated a crossover sell signal. This follows a buy signal created on Tuesday. Medium-term momentum has turned negative as the MACD generated a crossover sell signal. The MACD (moving average convergence divergence) histogram also generated a crossover sell signal.

Supply to the US Dropped

Supply declined according to the EIA the average total supply of natural gas fell by 1.4% compared with the previous report week. Dry natural gas production decreased by 1.3% compared with the previous report week, led by declines in the Appalachia Basin. The average net imports from Canada decreased by 4.6% from last week.