Natural Gas Price Prediction – Prices Fall as Storms Move Away from Natural Gas Infrastructure

Natural gas prices dropped on Tuesday falling approximately 4% as tropical storm Nana formed in the Gulf of Mexico but is headed for Latin American and is not going to target any of the natural gas installations according to the most recent report from NOAA. The weather is expected to be much cooler than normal in the mid-west which should increasing heating demand earlier than expected. Manufacturing data released on Tuesday was stronger than expected which should buoy natural gas demand.

Technical Analysis

Natural Gas price moved lower on Tuesday but held support at the prior day’s lows at 2.50. Short-term resistance is seen near the 10-day moving average at 2.59. Additional resistance is seen near the August highs at 2.74. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (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 RSI (relative strength index) continued to accelerate lower reflecting accelerating negative momentum.

Supply Declined in the Latest Week

Supply falls slightly according to the EIA. The average total supply of natural gas fell by 0.5% compared with the previous report week. Dry natural gas production decreased by 1.0% compared with the previous report week amidst shut-in natural gas production in the Gulf of Mexico. Average net imports from Canada increased by 10.3% from last week but remain a relatively small component of supply.