Natural Gas Price Prediction – Prices Rise as Weather Concerns Remain

Natural gas prices moved higher forming a continuation pattern The weather in the US is expected to be cooler than normal throughout the mid-west generating higher heating demand. There are two disturbances in the Atlantic that are headed toward the Caribbean that have a 20% chance of turning into a tropical cyclone according to NOAA.

Technical Analysis

Natural gas prices consolidated as concern over cool weather and hurricanes are keeping prices buoyed. Prices were able to recapture resistance seen near the 20-day moving average at 2.50. Support is seen near the former breakout level at 2.35 and then the 50-day moving average at 2.17. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell 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).

Demand Falls Driven by Power Generation

Demand drops driven by declines in power generation and building use. Total U.S. consumption of natural gas fell by 5.4% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 7.8% week over week. In the residential and commercial sectors, consumption declined by 5.4%. Industrial sector consumption decreased by 0.5% week over week.