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Natural Gas Price Prediction – Prices Rebound as Supply is Flat

Inventories are climbing but price declines have been steep
David Becker
Natural gas daily chart, April 26, 2019

Natural gas prices rebounded on Friday, as traders took profit ahead of the weekend. Prices are higher as the new contract was in contango which means that deferred contracts are higher than prompt contracts. For the week, the continuous natural gas contract was higher by 3%. Demand during April is generally soft and the  weather expected to remain moderate, which should allow inventories to build for the balance of the shoulder season. LNG prices in Asia have stabilized which could allow US natural gas prices to also stabilize.

Technical Analysis

Natural gas prices moved higher on Friday. Prices pushed through resistance near the 10-day moving average which is now seen as short-term support at 2.53 Resistance on natural gas is seen near the 50-day moving average at 2.72. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. The fast stochastic has moved from a low of 7, earlier in the week which is below the oversold trigger level of 20, to 25, which reflects accelerating short-term positive momentum. Medium term momentum has also turned positive as the MACD line generated a crossover buy signal.

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Supply was Flat This Week

The EIA reported that supply was flat this week with the average total supply of natural gas remained the same as in the previous report week, averaging 94.9 Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 4% from last week.

Demand falls as temperatures moderate. Total U.S. consumption of natural gas fell by 7% compared with the previous report week, according to data from the EIA. In the residential and commercial sectors, consumption declined by 21% as warmer temperatures reduced natural gas demand for space heating. Natural gas consumed for power generation declined by 1% week over week. Industrial sector consumption decreased by 1% week over week. Natural gas exports to Mexico decreased 11%. In addition, maintenance on the Corpus Christi pipeline, which delivers natural gas to Cheniere’s LNG export terminal, reduced feed gas flows to less than 0.1 Bcf per day as of Thursday.

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