Natural Gas Price Prediction – Prices Rebound to Test Resistance

Natural Gas prices moved higher but continue to trade in a wide range. Prices are having a difficult time breaking out despite lower than normal stockpiles ahead of the heating season. The weather over the next 2-weeks beginning in 6-days is expected to be colder than normal throughout the mid-west which is the hear of natural gas heating demand. Storage grew less than expected according to the Energy Information Administration as reflected by their last estimates of injections into stockpiles.

Technical Analysis

Natural gas prices whipsawed moving higher by 1.3% on Friday, but was unable to pierce through resistance near a downward sloping trend line that comes in near 3.29. Support on natural gas is seen near the 10-day moving average at 3.20. Additional support is seen near the 50-day moving average at 3.05. 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. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

The EIA reported that working gas in storage was 3,143 Bcf as of Friday, October 26, 2018. This represents a net increase of 48 Bcf from the previous week. Stocks were 623 Bcf less than last year at this time and 638 Bcf below the five-year average of 3,781 Bcf. At 3,143 Bcf, total working gas is below the five-year historical range.

Net Imports Were Negative

Net natural gas imports were minus 65 Bcf, or minus 2.1 Bcf per day, in August 2018, making the United States a net exporter. Total imports were 7.8 Bcf per day, a decrease of 2.4% from the 8.0 Bcf per day according to the EIA in August 2017. Total exports were 9.9 Bcf per day, an increase of 24.3% from the 8.0 Bcf per day in August 2017.