Natural Gas Price Prediction – Prices Form Inside Day and Continue to Trade Sideways

Natural gas prices moved lower on Tuesday reversing Monday rise. Warm weather at the beginning of the injection season is putting downward pressure on prices. Warmer than normal weather will cover most of the United States for the next 6-10 and 8-14 days. Natural gas product increased year over year in January, which was the 21^st consecutive month of rising production.

Technical Analysis

Natural gas traded sideways on Tuesday, and remain under pressure. Prices generated another inside day which is a lower high and a higher low which reflects indecision. Support is seen near the February lows at 2.54. Resistdance is seen near the 10-day moving average 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 MACD histogram is printing in the red with a downwarm sloping trajectory which points to lower prices and accelerating negative momentum. The fast stochastic tumbled but has not generated a crossover buy sign which could be a sign of a bottom. Additionally the fast stochastic appear is printing a reading of 13, below the oversold trigger level of 20 which could foreshadow a correction.

Production Continues to Rise

January 2019, for the 21st consecutive month, dry natural gas production increased year to year for the month, according to the EIA. The preliminary level for dry natural gas production in January 2019 was 2,746 billion cubic feet. This level was 10.7 Bcf per dayhigher than the January 2018 level of 77.9 Bcf per day. The average daily rate of dry natural gas production for January was the second highest for any daily rate for a month on record. Rising production is currently outpacing consumption which is putting pressure on prices.