Natural Gas Price Prediction – Prices Rally but Trend Points to Lower Prices

Natural gas prices moved higher on Tuesday as riskier assets gained traction. This comes despite a forecast from the National Oceanic Atmospheric Administration that predicts the weather will be warmer than normal over most of the United States for the next 6-10 and 8-14 days. European natural gas storage levels hit the highest levels on record which likely reduces the demand for US natural gas liquids.

Technical analysis

Natural gas prices rebounded on Tuesday but remain in a downtrend. Resistance is seen near the 10-day moving average at 1.72, while support is seen near the March lows at 1.55. Unless prices are able to rally and close above $2, the downtrend will remain in place. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The fast stochastic is printing a reading of 28, moving from oversold territory below 20 which points to higher prices. Medium-term negative momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the red with a flattening trajectory which points to consolidation.

EU Natural Gas Storage Surges

The EIA reported that European natural gas storage inventories as of March 1, 2020, were 60% full which is the highest ever recorded. European stock levels for both January and February 2020 were the highest ever recorded for those months. Europe’s high levels of natural gas in storage are the result of a mild winter, which limited winter heating demand, and growing natural gas imports by pipeline and as liquefied natural gas (LNG).