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Natural Gas Price Prediction – Prices Drop on EIA Forecast

Prices hold just above support levels
David Becker

Natural gas prices tumbled nearly 3%, as the EIA forecast lower prices in 2020. The 8-14 day weather forecast also showed moderation which weighed on prices.  The next 6-10 days is expected to be colder than normal. Hedge funds remain short and will not likely allow prices to push higher without significant cold weather. The supply of natural gas is on the rise according to the EIA.

 

Technicals

Natural gas prices slid closing near the lows of the session. Short term resistance is seen near the 10-day moving average near 2.15. Support on natural gas prices can be seen near the January lows at 2.08 and then a long term trend line on a weekly chart that comes in near 2.07. Momentum has now turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD index (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 is printing in the black with a rising trajectory which points to higher prices. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal.

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The EIA is Bearish Prices

The EIA Short-Term Energy Outlook forecasts that average U.S. natural gas prices will be 9% lower in 2020 than in 2019. EIA expects lower natural gas prices will be the result of continued production growth primarily in response to the following factors including improved drilling efficiency and cost reductions. Additionally, increased takeaway pipeline capacity from the Appalachian and Permian production regions should increase production capabilities.

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