Natural Gas Price Prediction – Prices Rebound but Momentum is Neutral

Natural gas prices rallied on Wednesday which was a shortened trading session due to the US independence day holiday. Prices traversed the 10-day moving average and after closing below it on Tuesday it closed above it on Wednesday rallying more than 2%. Natural gas consumption increased in 2018, reaching a fresh record high. Supply over the past week was flat, according to the EIA.

Technical Analysis

Natural gas prices moved higher on Wednesday but continues to trade in a range. Short term support is seen near the 10-day moving average at 2.26 and then the July lows at 2.23. Resistance is seen near the July highs near last weeks highs at 2.36. Medium term momentum is neutral as the MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat trajectory which reflects consolidation. Short term momentum is neutral as the fast stochastic generated a crossover buy signal after creating a sell signal on Tuesday. The current reading on the fast stochastic is 55, which is in the middle of the neutral range and reflects consolidation.

Consumption Increased in 2018

Natural gas consumption increased in 2018, reaching a new record consumption level of 82.1 billion cubic feet per day, according to the EIA. Natural gas consumption has increased in 8 of the past 10 years. Growth in natural gas consumption has largely been driven by increased consumption in the electric power sector. Overall, U.S. consumption of natural gas has increased by 37% since 2005.

Supply is flat. According to data from the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 94.2 Bcf per day. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada decreased by 2% from last week.