Natural Gas Price Prediction – Prices Rise as Dorian Becomes a Hurricane

Prices rise as volatility climbs
David Becker
Natural Gas

Natural gas prices moved higher on Wednesday as Dorian was upgraded to a hurricane. Dorian became a hurricane near St. Thomas and is currently headed for Puerto Rico. The storm is currently rated a category 1 storm with winds consistently blowing at 75-miles an hour. The forecast for the storm is to move north, north west, and slam into the central coast of Florida. There is currently downward pressure from Tropical depression 6, which could continue to force the storm west, which could push the hurricane into the Gulf of Mexico.

Technical Analysis

Natural gas prices moved higher as Hurricane Dorian gyrates. Resistance is seen near the mid-August highs 2.26. Support is seen near the 10-day moving average at 2.20. Short term momentum is neutral fast stochastic continues to generate alternating buy and sell signal. The fast stochastic has been whipsawing frequently which is a sign of choppy trade. Medium-term momentum positive to neutral as the MACD (moving average convergence divergence) histogram printing in the black with a declining trajectory which points to consolidation.

Could Hurricane Dorian Hit Natural Gas Production Facilities?

The relatively small chance that this occurs has buoyed natural gas prices. If the storm moves into the Gulf of Mexico it could hamper the production of natural gas drilling rigs. The change in the storm category has increased natural gas implied volatility which helps measure the value of options that are used to hedge natural gas positions. The weather in the United States over the next 8-14 days is expected to be cooler than normal reducing the demand for residential electricity.

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