Natural Gas Price Prediction – Prices Rebound and Remain Volatile

Natural gas prices surged higher rebounding more than 7% on Monday as colder than normal weather is forecast to cover most of the mid-west and east coast of the United States for the next 2-weeks.  Demand rose significantly during the past reporting week, and inventories are well below the 5-year average range.

Technical Analysis

Natural gas prices gapped higher on the open and the low was higher than Friday’s high.  Prices are volatile and remain in a large range, which is capped by Thursday’s high of $4.92, and floored by support at the 10-day moving average at 4.01.  Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic generated a crossover buy signal in the middle of the neutral range which also points to higher prices.

Demand Surged Higher

Demand rises significantly with higher consumption in the residential/commercial sectors. Total U.S. consumption of natural gas rose by 27% compared with the previous report week, according to data from the EIA, as cooler-than-normal weather blanketed most of the Lower 48 states. This increase was led by the residential and commercial sectors, where consumption increased by 58%. Natural gas consumed for power generation climbed 16% week over week. Industrial sector consumption increased by 7% week over week. Natural gas exports to Mexico decreased 2%.

Natural gas feedstock deliveries to U.S. LNG liquefaction facilities increase week over week. Combined natural gas feedstock deliveries to all U.S. LNG liquefaction facilities have averaged 4.3 Bcf per day over the last week, compared to 4.0 Bcf/d the previous week, according to data from EIA, as developers continue commissioning activities of the new liquefaction trains, including Sabine Pass Train 5, Corpus Christi Train 1, and Cameron LNG Train 1. Cheniere Energy, the developer of Sabine Pass and Corpus Christi liquefaction terminals, stated that the first LNG from Train 5 at Sabine Pass was produced in late October, and from Corpus Christi’s Train 1 on November 14. Corpus Christi will be the third U.S. LNG liquefaction terminal placed in service, after Sabine Pass and Cove Point. An LNG vessel has been moored at the Corpus Christi’s terminal berth to load the first LNG cargo from Train 1 since Sunday, according to SP Global Platts.