Natural Gas Price Prediction – Prices Rally and Close on Their Highs Ahead of Inventory Report

Natural gas prices surged another 2% on Wednesday and are higher by 7.3% for the week. According to the National Oceanic Atmospheric Administration, warmer than normal weather is expectred to cover most of the United States for the next 8-14 days. This warmer than normal weather is likely to induce additional cooling demand. Inventories are expected to increase by 24 Bcf when the Department of Energy releases them on Thursday.

Technical Analysis

Natural gas prices moved higher on Wednesday, up nearly 2%, following a 5% rise on Monday and Tuesday. Target resistance is seen near the February highs at 3.06. The 10-day moving average crossed above the 50-day moving average, which means that a medium-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the current reading on the fast stochastic is 98, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum is also positive as the MACD (moving average convergence divergence) histogram prints in positive territory with an upward sloping trajectory which points to higher prices.

Production is expected to be Flat

EIA forecasts that U.S. production of dry natural gas will average 91.4 Bcf per day in 2021, which is about the same as the 2020 average. Dry natural gas production falls to a low point of 90.8 Bcf per day in May 2021 before steadily increasing through most of the remainder of 2021, reaching a high of 92.4 Bcf per day in November 2021.