Natural Gas Price Prediction – Prices Rebound but Trend Remains Downward

Natural gas prices moved higher on Tuesday as the dollar eased which helped buoy commodity prices. Since natural gas is priced in dollars as a weaker dollar provided a bid under natural gas prices. This came as the Federal Reserve reduced interest rates by 50-basis points in a surprise move. The weather is expected to warmer than normal over the next 6-10 and 8-14 days, according to the latest forecast from the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices rebounded on Tuesday running into resistance near the 10-day moving average at 1.83. Prices remain in a downtrend. Support is seen near the February lows at 1.63. The next target is the 2016 lows at 1.61. After than level the market could fall in a whole and target a downtrend low channel that comes in near 1.23. This would be the target level within a 30-day period.

Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading of 38 shows and acceleration from the oversold trigger level of 20. The RSI (relative strength index) rebounded from oversold territory below 30 which reflects accelerating positive momentum.

Supply in the US is Neutral

The average total supply of natural gas remained the same as in the previous report week, averaging 100.0 Bcf per day according to date from the Energy Information Administration. Dry natural gas production remained unchanged week over week. Average net imports from Canada decreased by 7% from last week amid lower demand in Northeast and Midwestern markets.