Natural Gas Price Prediction – Prices Form Outside Day and Close at Session Highs

Natural gas prices moved higher whipsawing trader’s during the session, initially moving lower, but finding support and then rallying into the close. Tropical storm Laura has formed in the Atlantic and is expected to move into the Gulf of Mexico. Already BP has announced that it will be removing personnel from platforms in the Gulf. Additionally, tropical depression 14, is also headed for the Gulf of Mexico and is likely to arrive before Laura. This could be a one-two punch that disrupts natural gas production for a considerable period.

There is a third disturbance in the Atlantic just coming off the coast of Africa which has a 20% chance of becoming a tropical cyclone in the next 48-hours. The weather is expected to remain warmer than normal throughout most of the west coast, generating additional cooling demand. The US natural gas rig count declined by one rig according to a recent report from oil service giant Baker Hughes.

Technical Analysis

Natural gas prices whipsawed and finished on the highs of the session rallying 4% after declining to support near the 10-day moving average at 2.30. Resistance is seen near the May highs at 2.50. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 96, well above the overbought trigger level of 80, which could foreshadow a correction.