Natural Gas Price Prediction – Prices Hold Support as Hedge Funds add to Long Positions

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Published: May 11, 2020, 19:10 UTC

The weather is expected to get warmer on the east coast

Natural Gas Price Prediction – Prices Hold Support as Hedge Funds add to Long Positions

Natural gas prices rebounded from session lows to close in the black, despite falling demand for heating and cooling in buildings. The weather is expected to be warmer than normal for the easter portion of the United States over the next 6-10 and 8-14 days according to the latest report from the National Oceanic Atmospheric Administration. Hedge funds added to long position in futures and options and reduced short positions according to the latest report from the CFTC.

Technical Analysis

Natural gas prices moved lower initially on Monday and bounced at trend line support to close in the black. Support is seen near an upward sloping trend line that comes in near 1.80. Resistance is seen near the 50-day moving average at 1.88. It appears that the upward momentum in the 10-day moving average has peaked and is now heading toward the 50-day moving average. This could eventually generate a crossover sell signal.

Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generates a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average crossover below the MACD signal line (the 9-day moving average of the MACD line). The fast stochastic dropped and remains in oversold territory printing a reading of 18, which is below the oversold trigger level of 20 which could foreshadow a correction.

Demand Declines in Latest Week

Demand declined driven by decreased demand for heating and cooling in buildings. Total U.S. consumption of natural gas fell by 15.3% compared with the previous report week, according to data from the EIA. In the residential and commercial sectors, consumption declined by 38.2% driven by low consumption during the weekend. Natural gas consumed for power generation climbed by 0.5% week over week. Industrial sector consumption decreased by 11.8% week over week. Natural gas exports to Mexico decreased by 5.3%.

About the Author

David Beckerauthor

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.