Natural Gas Price Prediction – Prices Rally but Remain Subdued

Natural gas prices edged slightly higher on Tuesday but continue to trade sideways. Warmer than normal weather is expected to cover the east coast for the next 6-10 and 8-14 days, according to the latest forecast from the National Oceanic Atmospheric Administration. NOAA also forecasts that the weather will be cooler than normal on the west coast and the western upper mid-west of the United states during the next 2-weeks and normal in the mid-west. Hedge fund traders added to their long position in futures and options but remain short.

Technicals

Natural gas prices were slightly higher on Tuesday. Prices are hovering near short term resistance which is the December continuation contract lows at 2.15. Additional resistance is seen near the 10-day moving average near 2.18. Support on natural gas prices can be seen by looking at a long term trend line on a weekly chart that comes in near 2.07. Momentum has now turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD index (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 downward sloping trajectory which points to lower prices. Short term momentum has turned positive as the fast stochastic rebounded from below the 20-oversold trigger level which points to a possible rebound.

Hedge Funds Add to Long Positions

Managed money added to long position in futures and options according to the latest commitment of trader’s report released for the date ending December 31, 2019. According to the CFTC, managed money added 5K contracts to their opening interest in futures and options while reducing their short position buy less than 500 contracts. The total open interest shows that shorts outnumber longs in the managed money category by 2.8 to 1.