Natural Gas Price Prediction – Prices Rise Ahead of Inventory Report

Natural gas prices moved higher on Wednesday rising for a third consecutive trading session. This rise in prices comes ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 147 Bcf draw in stockpiles, according to survey provider Estimize. The weather is expected to be cooler than normal throughout most of the United States’ west coast, and warmer than normal across most of the mid-west and east coast for the next 2-weeks. Demand declined in the latest week due to power generation needs.

Technical analysis

Natural gas prices moved higher on Wednesday for a third consecutive trading day. Prices rallied 2.2% and are up more than 10% for the week. Prices broke through resistance which is now support near the 50-day moving average at 2.67. Resistance is seen near the January highs at 2.90. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario 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.

Demand Declines

Demand declines driven by a decrease in power generation. According to data from the EIA total U.S. consumption of natural gas fell by 5.4% compared with the previous report week. Natural gas consumed for power generation declined by 9.9% week over week. In the residential and commercial sectors, consumption declined by 4.6%. Industrial sector consumption decreased by 1.4% week over week. Natural gas exports to Mexico decreased 0.6%.