Natural Gas Price Prediction – Prices Rally on Warm Weather Forecast

Natural gas prices moved higher climbing 1.4%, as warmer than normal weather is forecast to cover most of the United States for the next 8-14 days according to the most recent estimate from the Nation Oceanic Atmospheric Administration.  Warmer weather should increase cooling demand and buoy natural gas use during the U.S. summer.  Inventories remain below the 5-year average, but are still within the average range.  Prices are forming a wedge pattern, and will eventually break to one side or another. Resistance is seen near a downward sloping trend line that comes in near 3.01. Support is seen near the 10-day moving average at 2.956, and then an upward sloping trend line that comes in near 2.90. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which reflects consolidation.

Net injections rise higher than the five-year average

Net injections into storage totaled 91 Bcf for the week ending June 15, and expectations are for a similar rise in the week ending June 22. Compared with the five-year average net injection of 83 Bcf and last year’s net injections of 63 Bcf during the same week. Net injections averaged 13.7 Bcf/d and will have to average 12.6 Bcf/d for the remainder of the refill season to match the five-year average level by October 31. Working gas stocks totaled 2,004 Bcf, which is 499 Bcf lower than the five-year average and 757 Bcf lower than last year at this time.

Week-over-week demand rises overall because of electric power generation. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from the EIA. With warmer weather this week compared to last week across much of the Lower 48 states, natural gas consumed for power generation climbed by 12% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 11%. Natural gas exports to Mexico were the same as last week, averaging 4.4 Bcf/d.