Natural Gas Price Prediction – Prices Poised to Test Support as Momentum Turns Negative

Natural gas prices moved lower dropping 1.4% despite a forecast of warmer than normal weather by NOAA. Cool weather is expected to move into the mid-west which might reduce cooling demand. Prices are headed for support near an upward sloping trend line that comes in near 2.67. Resistance is seen near the 200-day moving average at 2.87. Momentum has turned negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal.

Natural gas supply and consumption have grown significantly

Natural gas supply and consumption have grown significantly from the first half of 2017 through the first half of 2018. According to data from the EIA, total natural gas consumption in the Lower 48 states averaged 87.4 billion cubic feet per day (Bcf/d) during the first half of 2018, which is 8.4 Bcf/d (11%) greater than during the first half of 2017. The total supply of natural gas averaged 84.8 Bcf/d during the first half of 2018, a 7.8 Bcf/d (10%) year-on-year change.

Average week-over-week supply increases slightly

According to data from the EIA, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada decreased by 4% from last week.

Net injections fall to lower than the five-year average

Net injections fall to lower than the five-year average. Net injections into storage totaled 66 Bcf for the week ending June 22, compared with the five-year (2013–17) average net injection of 72 Bcf and last year’s net injections of 48 Bcf during the same week. Net injections averaged 9.6 Bcf/d and will have to average 13.3 Bcf/d for the remainder of the refill season to match the five-year average level by October 31. Working gas stocks totaled 2,074 Bcf, which is 501 Bcf lower than the five-year average and 735 Bcf lower than last year at this time.