Natural Gas Price Prediction – Prices Edge Higher forming Dead Cat Bounce

Natural gas prices moved higher, after tumbling on Tuesday to a contract low. This comes ahead of Thursday inventory report from the Energy Information Administration. Expectations are for a 85 Bcf build according to survey provider Estimize. The weather is expected to remain warmer than normal for the next 2-weeks, likely buoying demand. In its latest Drilling productivity report the EIA saw natural gas production efficiency increasing by 20% per year.

Technical Analysis

Natural gas prices moved higher on Wednesday rising .9% after losing 3% on Tuesday. Support is seen near the continuation contract low at 1.61. Resistance is seen near the 10-day moving average at 1.83. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 10, well below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

The EIA reported in its latest drilling rig productivity report that natural gas well efficiency shows how U.S. natural gas production increased in 2019 because, in part, of greater productivity of new wells drilled in shale and tight formations. Initial production rates for natural gas production from new wells in the DPR’s seven regions have generally increased approximately 20% a year since 2007.