Natural Gas Price Prediction – Prices Fall as Zeta Moves West

Natural gas prices moved lower and continued to chop in a wide range. Prices have had a difficult time trending. The weather is expected to be much colder than normal throughout the west coast and upper mid-west over the next 6-10 days. Hurricane Zeta is expected to move westward and potentially could miss the Gulf of Mexico avoiding any natural gas infrastructure. ISM manufacturing showed an increase in activity which would help buoy natural gas demand. The EIA forecasts that residential natural gas demand will increase during the 2020-2021 winter season.

Technical Analysis

Natural gas prices dropped 3.5% on Monday, reversing the recent rise, but remaining within the recent range. Prices sliced through support near the 10-day moving average at 3.28 which is now seen as resistance. Support is seen near the 50-day moving average at 3.21. 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 EIA Forecasts Higher Consumption

Natural gas demand is expected to rise in the residential space according to the Energy Information Administration. The EIA forecasts that residential natural gas consumption for the 2020–21 winter season average 21.1 billion cubic feet per day  5% more than last winter. EIA expects more residential natural gas consumption because of forecasts for colder temperatures this winter and changes in consumer behavior.