Natural Gas Price Prediction – Prices Ease But Rally on the Week as Hedge Funds Exit Short Positions

Natural gas prices moved lower on Friday but finished the week up 5.25%. Short-covering by funds during the week was likely the catalyst that drove prices. The weather is expected to remain cooler than normal through most of the eastern portion of the United States over the next 6-10 and 8-14 days, but be warmer than normal throughout most of the west coast. LNG exports rose week over week helping to buoy demand.

Technical Analysis

Natural gas prices continued to ease but still are higher by more than 5% for the week. Resistance is seen near the October highs at 2.73. A break of that level could lead to a test of the March highs at 2.90. Support on natural gas prices is seen near the 10-day moving average at 2.44. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 78, just below oversold trigger level which could foreshadow a correction. Medium-term momentum has turned positive 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 above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

LNG Exports Rise

US LNG exports increase over week, according to the EIA. Fourteen LNG vessels with a combined LNG-carrying capacity of 51 Bcf departed the United States between October 24 and October 30. One vessel was loading at the Sabine Pass terminal on Wednesday. One of the tankers loading at Sabine Pass was the Qatari-operated Q-flex tanker. Last report week was the second time a Very Large Qatari tanker loaded LNG in the United States since February 2016.