Natural Gas Price Prediction – Prices Drop Through Support on Declining Demand

Natural gas prices broke down and are headed for lower levels. Demand has declined, due to the spring shoulder period, and will not likely receive a boost until June. LNG demand in the form of exports has continued to decline due to a warmer than normal winter in China. The weather is expected to be normal over the next 8-14 days. Traders await Thursday’s inventory report from the Energy Information Admininstration. Expectations are for a 71 Bcf increase in natural gas stockpiles according to Estimize.

Technical Analysis

Natural gas prices broke through trend line support near the February lows at 2.54. The first stop of support is the May contract lows at 2.48. After that prices could fall back to the 2016 lows at 1.65. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell 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 MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices and accelerating negative momentum. The fast stochastic also generated a crossover sell signal, which points to accelerating negative moemtnum. The current reading on the fast stochastic is 1, which is below the oversold trigger level of 20, and could foreshadow a correction.

LNG Exports Decline Putting Pressure on Natural Gas Prices

US liquefied natural gas exports decrease week over week. Five LNG vessels with a combined LNG-carrying capacity of 17.8 Bcf departed the United States from April 4 to April 10, according to the EIA. One vessel was loading at the Sabine Pass terminal on Wednesday. On April 9, the Federal Energy Regulatory Commission authorized Cameron LNG to introduce hazardous fluids to commission Train 1. Train 1 is expected to enter service in the second quarter of 2019.