Natural Gas Price Prediction – Prices Fall, Reversing Monday’s Rally

Natural gas fails to remain buoyed on mixed weather pattern
David Becker
Natural Gas

Natural gas prices moved lower on Tuesday, reversing much of the gains it experienced on Monday. Gas prices were buoyed by colder than normal weather which is expected to cover most of the west over the next 2-week and warmer than normal weather which is expected to cover most of the southeast over the next 2-weeks. The combination of higher cooling demand in conjunction with higher heating demand is a resipe for higher prices during May.

Technical Analysis of Natural Gas

Natural gas prices reversed Monday’s rally, opening lower and heading down throughout the trading session. All the longs that were looking for a breakout above the 50-day moving average at 2.68 which is seen as resistance were caught as the market tumbled 2.2%. Prices fell through support, which is now resistance at the 10-day moving average at 2.62. Target support is seen near the May lows at 2.51. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. Meditum term momentum is turning negative. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Production is Likely to Climb

Th EIA forecasts in its Short-term Energy Outlook that dry natural gas production will average 90.3 billion cubic feet per day in 2019, up 6.9 Bcf per day from 2018. This comes as oil production continues to climb and natural gas pools are found near these areas. Additionally, the EIA forecasts that natural gas inventories ended March at 1.2 trillion cubic feet 16% lower than levels from a year earlier and 29% lower than the five-year average. EIA forecasts that natural gas storage injections will outpace the previous five-year average during the April-through-October injection season and that inventories will reach 3.7 Tcf at the end of October, which would be 15% higher than October 2018 levels and about equal to the five-year average.

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