Natural Gas Price Prediction – Prices Fail to Gain Traction

Traders await Thursday inventory report from the Department of Energy
David Becker
Natural gas daily chart, February 06, 2019

Natural gas attempted to move higher on Wednesday but ran into short term resinstace and was unable to hold on to its gains. By the end of the trading session prices were up slightly but near unchanged on the day. Colder than normal over the west coast of the United States will be offset by warmer than normal weather over most of the east coast. The market is pricing in a reduction in the decline in inventory expected until the middle of February.

Technical Analysis

Natural gas prices moved higher but there was little follow through and prices closed nearly unchanged. Support is seen near the March 2018 lows at 2.55. Additional support is seen near the 2018 lows at 2.50. Momentum remains negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. Prices are oversold. The fast stochastic is printing a reading of 3, below the oversold trigger level of 20 which could foreshadow a correction.

Supply Is Unchanged

According to data from the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 94.0 Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 7% from last week amid cold weather. Demand rises, driven by the residential and commercial sector. Total U.S. consumption of natural gas rose by 8% compared with the previous report week, according to the EIA. In the residential and commercial sectors, consumption increased by 11%, reaching a near-record high of 70.9 Bcf per day on Wednesday, January 30, the second-highest value ever recorded. Natural gas consumed for power generation climbed by 6% week over week. Industrial sector consumption increased by 4% week over week. Natural gas exports to Mexico increased 3%averaging 4.9 Bcf per day reaching a record weekly high.

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