Natural Gas Price Prediction – Prices Rise as Storms Brew

Natural gas prices moved higher but settled well off the lows as Hurricane Sally formed in the Gulf of Mexico. The weather has turned milder and is likely to be warmer than normal on the west coast and cooler than normal on the east coast. Several storms are percolating in the Atlantic. A total of 7 include 2-hurricanes and 3-tropical storms in the Atlantic with only one other than Sally that looks to be headed toward the Gulf of Mexico.

Technical Analysis

Natural gas prices moved higher but came off the highs of the day despite a hurricane forming in the Gulf of Mexico. Support is seen near the 50-day moving average at 2.24. Resistance is seen near the 10-day moving average at 2.44. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 14, below the oversold trigger level of 20 which could foreshadow a correction.

Supply Edges Lower

Supply falls slightly in the latest week according to data from the EIA. The average total supply of natural gas fell by 0.3% compared with the previous report week. Dry natural gas production grew by 0.7% compared with the previous report week as Gulf of Mexico production returned following Hurricane Laura-related shut-ins. The average net imports from Canada decreased by 19.4% from last week.