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Natural Gas Price Prediction – Prices Drop Through Support Despite Warm Weather Forecaste

By:
David Becker
Published: Jul 2, 2018, 18:02 UTC

Natural gas prices broke down through trend line support on Monday, despite soaring temperatures and the forecast of warmer than normal temperatures

Natural Gas Price Prediction – Prices Drop Through Support Despite Warm Weather Forecaste

Natural gas prices broke down through trend line support on Monday, despite soaring temperatures and the forecast of warmer than normal temperatures forecast to cover most of the United States for the next 8-14 days.  Current stock levels are below the 5-year average and close to the lower end of the 5-year average range.

Prices slipped through trend line support near 2.87 and could test target support near the May lows at 2.70. Resistance on natural gas is seen near the 10-day moving average at 2.94.  Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover buy signal. This 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 one caveat is that prices are oversold. The fast stochastic is printing a reading of 2, well below the oversold trigger level of 20 and could foreshadow a correction.

Net injections Fall Below the 5-year Average

Net injections into storage totaled 66 Bcf for the week ending June 22, compared with the five-year average net injection of 72 Bcf and last year’s net injections of 48 Bcf during the same week. Net injections averaged 9.6 Bcf/d and will have to average 13.3 Bcf/d for the remainder of the refill season to match the five-year average level of 3,815 Bcf by October 31. Working gas stocks totaled 2,074 Bcf, which is 501 Bcf lower than the five-year average and 735 Bcf lower than last year at this time, according to the EIA.

EIA revises working gas levels for the previous report week

The EIA reported revisions to working gas levels in the South Central region increased working gas levels by 4 Bcf for the week ending July 15, 2018. As a result of these revisions, the net change for the previous report week changed from 91 Bcf to 95 Bcf. The weekly net change for the week ending June 22 was not affected by the revision. EIA last reported a revision for the week ending June 30, 2017.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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