Natural Gas Price Prediction – Prices Rebound but Fail at Resistance

Natural gas prices moved higher on Tuesday rising more than 1% but running into trend line resistance. Strong production in 2019 is likely to keep a cap on prices. Additinoally and an increase in tariffs for US LNG into China could reduce demand. The EIA estimates that natural gas inventories are 16% below the prior year’s levels and 29% below the 5-year average.

Technical Analysis

Natural gas prices rose 1.11% on Tuesday, surging on the open but unable to pierce through resistance which was former support near an upward sloping trend line that comes in near 2.67. Support is seen near the 10-day moving average near 2.59. Momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with a rising trajectory which points to higher prices. Short-term momentum is also positive. The fast stochastics is rising, but the trajectory is flattening which reflects short-term consolidation. The fast stochastic is printing a reading of 91, well above the overbought trigger level of 80 which could foreshadow a correction in natural gas prices.

The Department of Energy Sees Risign Production

The Energy Information Administration forecasts that dry natural gas production will average 90.3 billion cubic feet per day in 2019, up 6.9 Bcf per day from 2018. EIA expects natural gas production will continue to grow in 2020 to an average of 92.2 Bcf per day. The EIA estimates that natural gas inventories ended March at 1.2 trillion cubic feet, 16% lower than levels from a year earlier and 29% lower than the five-year average. EIA forecasts that natural gas storage injections will outpace the previous five-year average during the April-through-October injection season and that inventories will reach 3.7 Tcf at the end of October, which would be 15% higher than October 2018 levels and about equal to the five-year average.