Natural Gas Price Prediction – Prices Rebound on Outside Day Pattern

Natural gas prices moved higher on Monday forming an outside day after hitting support levels. Storms continue to make their presence, but none are expected to hit a natural gas infrastructure location. Tropical storm Karen is moving toward the Bahamas but it is not expected to move toward the Gulf of Mexico. The weather is expected to be much warmer than normal over the next 8-14 days according to the National Oceanic Atmospheric Administration. This could increase cooling demand, during a period when the weather usually turns cooler.

Technical Analysis

Natural gas prices moved higher on Monday after testing lower levels forming an outside day. This is generally considered a reversal pattern. It happens when there is a lower low a higher high and a higher close. Support is seen near the 20-day moving average at 2.48. Short term resistance is seen near the 10-day moving average at 2.58. Medium-term momentum is about to turn 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). Short term momentum has turned negative as the fast stochastic generated a crossover sell signal and continues to accelerate lower.

The EIA reports that in July natural gas production increased year to year for the month, for the 26^th consecutive month. The preliminary level for dry natural gas production in June 2019 was 2,735 billion cubic feet (or 91.2 Bcf per day. This level was 9.4 Bcf per day higher than the June 2018 level of 81.8 Bcf per day according to the EIA. The average daily rate of dry production was the highest for any month since EIA began tracking monthly dry production in 1997.