Natural Gas Price Prediction – Prices Drop on Warm Weather Forecast

Natural gas prices moved lower on Monday, dropping 7%, as warmer than normal weather is expected to reduce heating demand as the Calendar turns to November. LNG exports continue to rise, which has helped demand. There are no disturbances in the Atlantic that are expected to become tropical cyclones over the next 48-hours. The EIA expects inventories to drop 5% to the 5-year average for the 9-months ending September.

Technical Analysis

On Monday, natural gas prices tumbled, dropping 7% and poised to test target support near the 50-day moving average at 4.86. Resistance is seen near the 10-day moving average at 5.57. Prices are oversold as the fast stochastic prints a reading of 2, below the oversold trigger level of 20, foreshadowing a correction. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a downward sloping trajectory which points to lower prices.

Inventories Are Expected to Remain Below Average

The EIA forecasts that U.S. natural gas inventories ended September 2021 at about 3.3 trillion cubic feet 5% less than the five-year average for this time of year. Injections into storage this summer have been below the previous five-year average, largely as a result of more electricity consumption in June due to hot weather, and increased exports even as domestic natural gas production has remained flat.