Natural Gas Price Prediction – Prices Rise but are Capped by Resistance

Natural gas prices attempted to break out on Tuesday but were unable to pierce through resistdance. Prices increased by approximately 0.6%, as warmer than normal weather is expected to cover most of the US for the next 6-10 days as well as the next 8-14 days. The EIA forecast that gas production will rise in 2019 and inventories will end March 14% below last years levels.

Technical Analysis

Natural gas price moved higher on Tuesday but was unable to push through resistance near a downward sloping trend line that comes in near 2.91. Support is seen near the 10-day moving average at 2.83. Additional support is seen near an upward sloping trend line at 2.80. Medium term momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a flat trajectory which points to consolidation. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in the middle of the neutral range which points to accelerating positive momentum.

Increasing Production is Forecast to Raise Inventories

The Energy Information Administration forecasts that dry natural gas production will average 90.7 billion cubic feet per day in 2019, up 7.4 Bcf per day from 2018. EIA expects natural gas production will continue to rise in 2020 to an average of 92.0 Bcf per day. Additionally, the EIA expects natural gas inventories will end March at 1.2 trillion cubic feet which would be 14% lower than levels from a year earlier and 28% lower than the five-year average. EIA forecasts that natural gas storage injections will outpace the previous five-year average during the April-through-October injection season and that inventories will reach 3.6 Tcf at the end of October, which would be 12% higher than October 2018 levels and 2% below the five-year average.