Natural Gas Price Prediction – Prices Fall on Weak IP

Natural gas prices declined by nearly 3% as industrial production rose less than expected. The EIA estimates that total U.S. working natural gas in storage ended May at almost 2.8 trillion cubic feet, 18% more than the five-year average. Inventories are expected to rise by 85 Bcf on Thursday when the Energy Department releases its estimates according to survey provider Estimize.

Technical Analysis

Natural gas prices moved lower on Tuesday dropping nearly 3%, and making new contract lows. Target support is the continuation contract lows at 1.51. Resistance is seen near the 10-day moving average at 1.85. Momentum has turned negative as the MACD (moving average convergence divergence) 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 MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Industrial Production Rises Less than Expected

Industrial production rose 1.4% in May after plummeting a record 12.4% in April and 4.6% in March. Expectations were for a 2.5% increase in May Industrial Production. Manufacturing output rose 3.8% last month as auto plants began to ramp back up; but production of cars and auto parts remained 62.8% below its May 2019 level. Output at mines fell 6.8% last month, pulled down by a 37% drop in oil and gas drilling. Utility production fell 2.3%.