Natural Gas Price Prediction – Prices Drop on Warm Weather Forecast

Natural gas prices moved lower on Tuesday reversing Monday rise as warmer than normal weather is forecast to cover most of the United States for the next 6-14 days according to the National Oceanic Atmospheric Administration.  With the weather warmer than normal heating demand will be muted into the holiday season.  In its short-term energy outlook the EIA estimates higher production year over year which will continue to increase in 2019.

Technical Analysis

Natural Gas prices moved lower dropping more than 3% and reversing Monday’s rise. Prices continue to form a bull flag pattern which is a pause that refreshes higher. Prices slid through the 10-day moving average which is now seen as resistance near 4.50. Additional resistance is seen near a downward sloping trend line that comes in near 4.67. Support on natural gas is seen near an upward sloping trend line that comes in near 4.33. Momentum remains negative as the MACD (moving average convergence divergence) histogram is printing in the black with a downward sloping trajectory which points to lower prices. The fast stochastic generated a crossover sell signal which also points to lower prices.

The EIA Seen Increasing Production and Lower Inventories

Inventories continue to remain well below the 5-year average range for this time of year. The EIA estimates that U.S. natural gas storage inventories were 3.0 trillion cubic feet at the end of November, which was 19% lower than the five-year average for the end of November.

EIA forecasts that dry natural gas production will average 83.3 billion cubic feet per day Bcf per day in 2018, up 8.5 Bcf per day from 2017. Both the level and volume growth of natural gas production in 2018 would establish new records. EIA expects natural gas production will continue to rise in 2019 to an average of 90.0 Bcf per day.