Natural Gas Price Prediction – Prices Edge Higher Ahead of Inventory Report

Natural gas prices edged higher on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for a 14 Bcf build in natural gas stockpiles according to survey provider Estimize. Hurricane ETA is moving back into the Gulf of Mexico. This could generate supply disruptions. There is also another storm that is entering the Caribbean which has a 10% chance of forming a tropical cyclone in the next 48-hours according to NOAA. The weather is expected to be warmer than normal over the next 8-14 days according to NOAA.

Technical Analysis

Natural gas prices whipsawed edge higher on Tuesday, closing slightly higher on the session. Target support is seen near the July lows at 2.65. Resistance is seen near the 10-day moving average at 3.08. The 10-day moving average has crossed below the 50-day moving average which means that a short-term downtrend is now in place. Prices have bounced from nearly oversold as the RSI (relative strength index) is printing a reading of 33, just above the oversold trigger level of 30 and bouncing from 32 on Monday. Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

Consumption Declines

U.S. consumption of natural gas will average 83.7 billion cubic feet per day in 2020, down 1.7% from 2019 according to the EIA. The decline in total U.S. consumption reflects less heating demand in early 2020, contributing to residential demand in 2020 averaging 13.2 Bcf/d and commercial demand in 2020 averaging 8.8 Bcf/d (down 0.9 Bcf/d from 2019). EIA forecasts industrial consumption will average 22.5 Bcf/d in 2020, down 0.6 Bcf/d from 2019 as a result of reduced manufacturing activity. EIA expects total U.S. natural gas consumption will average 79.4 Bcf/d in 2021, a 5.2% decline from 2020.