Natural Gas Price Prediction – Prices Rebound but Remain Rangebound

Natural gas prices moved higher on Friday, and continues to consolidate after falling from its recent November highs. The weather continues to remain warmer than normal across the east coast and colder than normal across the west.  Supply fell in the latest week as imported from Canada dropped 3%. Demand moved lower as warmer than normal weather substantially reduced residential consumption.

Technical Analysis

Natural gas prices rebounded and remain rangebound after finding support near an upward sloping trend line that comes in near 3.51. Resistance is seen near the 10-day moving average at 3.95. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal and has come out of oversold level. Negative momentum has decelerated as the MACD (moving average convergence divergence) histogram prints in the red with a flattening trajectory which points to consolidation.

Supply falls as Imports Decline

The EIA reports that the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 3% from last week.

Demand Declined on Warm Weather

Demand falls, driven by decline in residential and commercial consumption. Total U.S. consumption of natural gas fell by 16% compared with the previous report week, according to data from the EIA. The largest decrease in consumption came in the residential and commercial sectors, where natural gas use declined by 25% with warmer-than-normal weather across the Lower 48 states. Natural gas consumed for power generation declined by 11% week over week. Industrial sector consumption decreased by 3% week over week. Natural gas exports to Mexico decreased 2%.

Durable Goods Rose Less than Expected

Durable goods orders rose by 0.8% in November according to a report from the Commerce Department said Friday. Expectations were for a rebound of 2%. This followed a sharp fall of 4.3% in October when orders for commercial and military aircraft plunged. Orders in November, excluding transportation, dropped 0.3%. Business spending plans declined 0.6%.