Natural Gas Price Prediction – Prices Rebound Near Support

Natural gas prices rebounded higher and continues to trade in a tight range. There are few disturbances that could threaten infrastructure in the Gulf of Mexico, which has taken some of the wind out of prices.  Demand continues to remain subdued despite a tick up in residential demand due to warm weather that is forecast to cover most of the United States for the next 2-weeks.

Technicals

Natural gas prices rebounded on Monday after testing support near an upward sloping trend line that comes in near 2.76 on Friday.  While inventories remain below the 5-year average range, traders are comfortable with current levels given the robust production of natural gas.  Resistance is seen near the 50-day moving average at 2.82. Momentum is negative but decelerating as the MACD (moving average convergence divergence) histogram prints in the red with a flattening trajectory which points to consolidation.

According to the EIA supply is flat and the average total supply of natural gas remained the same as in the previous report week, averaging 87.8 Bcf per day. Dry natural gas production increased 0.4% week over week, exceeding 83 Bcf/d for the first time on a weekly basis. Average net imports from Canada decreased by 11% from last week.

Overall demand is down despite increases in the residential and commercial sectors. Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 8% week over week. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 26%. Natural gas exports to Mexico decreased 7%.

U.S. liquefied natural gas (LNG) exports increase week over week. Six LNG with a combined LNG-carrying capacity of 21.2 Bcf departed the United States from September 6 through September 12. Two more tankers were loading at Sabine Pass.