Natural Gas Price Prediction – Prices Rebound from Support and Close Higher

David Becker
Natural gas daily chart, January 16, 2019

Natural gas prices whipsawed rebounding from session lows near support at the 10-day moving average and surging into the close on a colder than normal forecast.  The weather over the next 2-weeks is expected to be much colder than normal throughout most of the mid-west according to the latest forecast from the National Oceanic atmospheric Administration.  Supplies of natural gas are rising but they are offset by higher LNG exports. The cold weather will continue to add to the upside risks.

Technical Analysis

Natural gas prices found support near the 10-day moving average at 3.32 and surged into the close reversing the downmove. Prices ran into resistance which is the first Fibonacci retracement level near 3.65. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Supplies increased according the EIA. The average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 18% from last week as U.S. imports from Canada increased while U.S. exports to Canada declined.

Demand is Rising on Cooler Temperatures

The EIA reports that demand rises amid cooler temperatures. Total U.S. consumption of natural gas rose by 18% compared with the previous report week, according to data from the EIA, averaging 97.2 Bcf per day. Natural gas consumed for power generation rose 14%. Industrial sector consumption increased 5% week over week. In the residential and commercial sectors, consumption increased 30%, averaging 46.9 Bcf per day during the report week as winter weather swept through most of the Lower 48 states. Natural gas exports to Mexico declined 1% week over week, averaging 4.7 Bcf per day for the report week.

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