Natural Gas Price Prediction – Prices Edge Lower but Uptrend Remains

Natural gas prices consolidated on Monday after rallying last week. Hedge funds significantly reduced their short positions in futures and options according to the latest commitment of traders report. Two storms are making their way westward from Africa in the Atlantic Ocean that currently has a 20% chance of turning into a tropical cyclone. The weather is expected to remain warmer than normal in the western portion of the United States which should continue to buoying cooling demand.

Technical Analysis

Natural gas prices consolidated and moved lower on Monday. Support is seen near a downward sloping trend line that comes in at 2.26. Resistance is seen near the May highs at 2.50. Short-term momentum is neutral as the fast stochastic is poised to generate a crossover sell signal. The current reading on the fast stochastic is 90, above the overbought trigger level which could foreshadow a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Hedge Funds Cover Shorts

The price squeeze seen last week was generated by a robust short-covering. Hedge funds reduced short position in futures and options by 37K contracts, according to the most recent commitment of trader’s report released for the date ending August 11, 2020.