Natural Gas Price Prediction – Prices Ease Despite Rising Demand

Natural gas prices moved lower on Tuesday giving back some of Monday’s gains. Prices have been capped by the forecast of warmer than normal weather that are expected to cover most of the United States for the next 6-10 and 8-14 days. Demand rose in the latest week according to a recent report from the Energy Information Administration. Momentum has turned positive, despite a recent consolidation. Hedge funds continue to add to short positions in futures and options according to the most commitment of trader’s report released for the date ending December 10, 2019.

Technicals

Prices reversed on Tuesday declining nearly 1% after rallying more than 2.7% on Monday. Support is seen near the 10-day moving average at 2.32. Resistance on natural gas prices is seen near the breakdown level near 2.57, and then the 50-day moving average at 2.59. Prices are hovering near a gap that occurred in early December. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal 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. Short term momentum is also positive as the fast stochastic generated a crossover buy signal.

Demand is On the Rise

Demand increased in the latest week driven by the electric power sector. Total US consumption of natural gas rose by 2% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 6% week over week. Industrial sector consumption decreased by 3% week over week. In the residential and commercial sectors, consumption increased by 2%. Natural gas exports to Mexico increased by 2%.