Natural Gas Price Prediction – Prices Rebound Ahead of Inventory Report

Natural gas prices rebounded on Wednesday ahead of Thursday’s inventory report from the Department of Energy. For the 46^th week of the year, expectations are for a 49 Bcf draw according to survey provider Estimize. Last week, inventories rose by 3 Bcf lower than expected. The weather is expected to be cooler than normal over the western portion of the US and warmer than normal over the eastern portion of the United States.

Technical Analysis

Natural gas prices moved higher on Wednesday after declining 4% on Monday and 2% on Tuesday. Prices are poised to test resistance near an upward sloping trend line that was former support which coincides with the 10-day moving average near 2.63. Support is seen near the November lows at 2.50. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The fast stochastic is now printing a reading of 17, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (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 red with a declining trajectory which points to lower prices.

Demand Rises With Cold Weather

Demand rose in the latest week with cold weather, hitting a new consumption record. Total U.S. consumption of natural gas rose by 10% compared with the previous report week, according to data from the EIA reaching an all-time high for November of 126 Bcf per day approximately 15 Bcf higher than the previous record. Natural gas consumed for power generation climbed by 6% week over week. Industrial sector consumption increased by 3% week over week. In the residential and commercial sectors, consumption increased by 20%.