Natural Gas Price Prediction – Prices Fall but Remain Rangebound

Natural gas prices declined 2.5% on Monday, as riskier assets continue to trade under pressure. Inventories remain elevated but prices reflect continued production. The lack of manufacturing demand could reduce overall demand, as the US economy begins to contract. Weaker than expected Chinese data will likely weigh on LNG exports that are expected to head for the far east. Demand tumbled in the latest week due to warm temperatures according to the Energy Information Administration.

Technical Analysis

Natural gas prices moved lower on Monday but continue to chop sideways in a large range. Prices are hovering near the 10-day moving average seen near 1.82. Resistance is seen near the March highs at $2 while support is seen near the March lows at $1.61. Momentum is turning neutral as the MACD (moving average convergence divergence) histogram prints in black with a declining trajectory which points to consolidation.

Demand Declines

Demand falls with warm temperatures, according to the EIA. Total U.S. consumption of natural gas fell by 10% compared with the previous report week, according to data from the EIA. Declines were largest in the residential and commercial sectors, where consumption declined by 20% with lower demand for space heating. Natural gas consumed for power generation declined by 6% week over week. Industrial sector consumption decreased by 2% week over week.