Natural Gas Price Prediction – Prices Rebound but Trend is Down

Natural gas sees a dead cat bounce
David Becker
Natural gas weekly chart, March 25, 2019

 

Natural gas prices rebounded on Monday, after breaking through support level on Friday. Consumption data was reported by the energy information administration which helped prices gain traction. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days which will reduce heating demand and weigh on prices.

Technical Analysis

Natural gas prices moved higher on Monday, rebounded from Friday’s breakdown. Prices made a lower low and a lower high which is a sign of a down trend. Resistance is seen near the 10-day moving average at 2.81. Support is seen near the February lows at 2.54. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices and accelerating negative momentum.

EIA Reports Stronger Natural Gas Electricity Consumption

U.S. natural gas consumption increased by 10% in 2018, reaching a record high of 82.1 billion cubic feet per day according to EIA’s recently released Natural Gas Monthly. Domestic consumption of natural gas increased across all sectors in 2018, led by a 3.8 Bcf per day increase in the electric power sector caused by a combination of recent natural gas-fired electric capacity additions and weather-related factors.

The EIA reported that the electric power sector consumed 29.1 Bcf per day in 2018, or 35% of total domestic U.S. natural gas consumption. Natural gas continued to make up the highest share of utility-scale electricity generation after first surpassing coal-fired generation on an annual basis in 2016. Specifically, natural gas accounted for one-third of utility-scale electricity generation in 2018. New natural gas generator capacity additions continued to displace coal-fired power plants and other less efficient sources of electricity.

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