Natural Gas Price Prediction – Prices Ease Despite Cold Weather Forecast

 

Natural Gas prices moved lower on Tuesday, easing after Monday’s rally. Prices declined by approximately 1.6%. Colder than normal weather continues to be forecasted to cover most of the mid-west of the US for the next 2-weeks increasing heating demand. There is one tropical storm headed to the Caribbean which has a 30% chance of turning into a tropical cyclone over the next 48-hours according to NOAA.

Technical Analysis

Natural gas prices eased losing 1.6%  after whipsawing on Monday. Support is seen near the 50-day moving average near 2.75. Resistance is seen near the September highs at 3. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. Short-term momentum has also turned positive as the fast stochastic continues to accelerate higher. The current reading on the fast stochastic is 81, above the overbought trigger level of 80 which could foreshadow a correction.

The Energy Information Administration Estimates a 12% increase in Inventories

EIA estimates that natural gas in storage ended September at more than 3.8 trillion cubic feet a 12% more than the five-year average. In the forecast, EIA expects inventories to be more than 4.0 Tcf on October 31, which would be a record high. However, because expected natural gas production will be lower this winter than last winter, EIA forecasts inventory draws will outpace the five-year average during the heating season and end March 2021 at 1.7 Tcf, which would be 6% lower than the 2016–20 average.