Natural Gas Price Prediction – Prices Rebound Friday but Decline 4.5% for the Week

Natural gas prices rebounded on Friday, rising 0.8% but the energy source declined 4.5% for the week. Mild weather did not descrease natural gas electricity demand. The larger than expected build in natural gas inventories was a function of robust supplies which continue to weigh on natural gas prices.

Technical Analysis

Natural gas prices pushed rebounded but finished the week in the red. Resistance is seen near former support near a horizontal trend line at 2.43. Support is seen near the 2016 lows at 1.91.

Prices are nearly oversold. The relative strength index (RSI) which is a momentum oscillator is printing a reading of 32, above the oversold trigger level of 30 which could foreshadow a correction. The fast stochastic generated a crossover sell buy in oversold territory, which also is an oversold condition. The current reading on the fast stochastic is 9, is below the oversold trigger level of 20, which could foreshadow a correction. Medium term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Supplies are Unchanged

The EIA reported that the average total supply of natural gas remained the same as in the previous report week, averaging 94.2 Bcf/d. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada increased by 8% from last week. Increased natural gas-fired power generation drives rising demand. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 10% week over week. Industrial sector consumption increased by 2% week over week. In the residential and commercial sectors, consumption declined by 11%. Natural gas exports to Mexico increased by 1%.