Natural Gas Price Prediction – Prices Drop on Warm Weather Forecast

Key Insights

• Natural gas dropped sharply.
• The weather is expected to be warmer than normal.
• U.S. Natural Gas Supply was flat this week.

Natural gas prices tumbled on Monday after hitting 13-year highs late last week. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal during the next 6-10 days. Natural gas supplies were unchanged week over week.

According to the Energy Information Administration, U.S. natural gas supply is essentially unchanged week over week. The average total supply of natural gas rose by 0.1% week over week. The small increase resulted from slightly higher domestic dry natural gas production, while average net imports from Canada were flat.

Technical Analysis

On Monday, natural gas prices tumbled, dropping more than 11%. Prices slid through former support, which is now resistance near the 20-day moving average at 7.29. Target support is seen near the 50-day moving average at 6.01.

Medium-term momentum has turned negative. The MACD (moving average convergence divergence) generated a crossover sell signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.