Natural Gas Price Prediction – Prices Rise as Tropical Storm Brews

Natural gas prices edged higher rising approximately 0.5%, as traders eye a tropical storm that is brewing in the Gulf of Mexico. The national oceanic atmospheric administration reports that a storm in the Gulf of Mexico has a 70% chance of forming a tropical cyclone. That is up from 40% this morning and has increased the volatility in the natural gas market. Prices appear to be forming a bull flag pattern that is a pause that refreshes higher. Natural gas inventories are scheduled to be released by the Department of Energy on Thursday. Expectations are for a 73 Bcf increased in natural gas stockpiles according to Estimize. Last week inventories increased by 98 Bcf.

Technical Analysis

Natural gas prices moved higher on Tuesday forming a bull flag pattern which is a pause that refreshes higher. Support on natural gas is seen near the 10-day moving average at 2.34. Resistance is seen near the July highs at 2.47. Momentum has turned positive as the MACD (moving average convergence divergence) index recent generated a crossover buy signal. This occurs as the MACD line (the 12-day moving averaged 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 relative strength index (RSI) which is a momentum oscillator which measures accelerating and decelerating momentum, is printing a reading of 54, which is in the middle of the neutral range and reflects consolidation. The EIA reports that In 2018, 90% of the natural gas used in the United States was produced domestically. The U.S. electric power sector has been the largest end user of natural gas in three of the last four years, surpassing the industrial sector for the first time in 2012. In 2018, about 35% of the natural gas consumed in the United States was used by the electric power sector to generate electricity and heat.