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Natural Gas Price Prediction – Prices Fall, Ahead of Inventory Report

Expectations are for a 95 Bcf draw
David Becker
Gas industry

Natural gas prices moved lower declining by 1.8% but continue to trade sideways in a tight range. This comes ahead of Thursday’s inventory report. Expectations are for natural gas stockpiles to decline by 95 Bcf according to survey provider Estimize. Warmer than normal weather is expected to cover the east coast for the next 6-10 and 8-14 days, according to the latest forecast from the National Oceanic Atmospheric Administration. NOAA also forecasts that the weather will be cooler than normal on the west coast and the western upper mid-west of the United States during the next 2-weeks and normal in the mid-west. It’s difficult to tell whether cold air will move westward.

 

Technicals

Natural gas prices were lower Wednesday ahead of Thursday’s inventory report. Prices are hovering below short term resistance which is the December continuation contract lows at 2.15. Additional resistance is seen near the 10-day moving average near 2.17. Support on natural gas prices can be seen by looking at a long term trend line on a weekly chart that comes in near 2.07. Momentum has now turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD index (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. Short term momentum has turned positive as the fast stochastic rebounded from below the 20-oversold trigger level which points to a possible rebound.

Supply is Unchanged

Supply is flat. According to the EIA the average total supply of natural gas remained the same as in the previous report week, averaging 100.6 Bcf per day. Dry natural gas production decreased by 1% compared with the previous report week. The average net imports from Canada increased by 17% from last week.

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