Natural Gas Price Prediction – Prices Rebound a Storms Brew in the Atlantic

Natural gas prices increased on Friday, recapturing former resistance now support at the 10-day moving average at 2.92.  Warmer than normal weather is expected to cover most of the United States for the next 6-10 and 8-14 days which should generated additional cooling demand. There is a tropical disturbance which has moved off the cost of Africa, and is now in the Atlantic and has more than a 60% chance of becoming a tropical storm according to the National Oceanic Atmospheric Administration.

Technical Analysis

Prices rose 1.6%, recapturing the 10-day moving average. Support below this level is seen near the 50-day moving average at 2.86. Momentum has turned positive as the MACD (moving average convergence divergence index) generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Overall supply is flat

The Department of Energy reports that the average total supply of natural gas remained about the same as in the previous report week, averaging 88.2 Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 5% from last week.

Overall demand is flat

The EIA reported that total U.S. consumption of natural gas was unchanged from the previous report week, averaging 62.3 Bcf per day. Natural gas consumed for power generation remained largely unchanged, averaging 35.0 Bcf/d. However, with mixed temperatures across the Lower 48 states, regional power demand varied; demand in the Northeast increased the most, averaging about 0.9 Bcf per day higher this week compared to last week, while demand in the West saw the largest declines, averaging about 0.7 Bcf per day lower this week compared to last week. Industrial sector consumption stayed constant, averaging 19.8 Bcf per day. In the residential and commercial sectors, consumption remained at last week’s level, averaging 7.5 Bcf per day. Natural gas exports to Mexico decreased 2%.