Natural Gas Price Prediction – Prices Rise but are Fast Approaching Resistance

Natural gas prices moved higher, as much colder than expected weather is expected to cover the pacific north west. May is generally a mild weather period, but the weather has been mixed, allowing natural gas prices to edge higher. Rising demand has been offset by stronger than normal production and a decline in natural gas exports. Inventories did not rise as much as expected last week, providing a backdrop for higher natural gas prices.

Technical Analysis

Natural gas prices moved higher hitting a higher high and making a higher low as prices attempt to test resistance near an upward sloping trend line that comes in near 2.67. Support is seen near the 10-day moving average at 2.58. Medium term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic has moved sideways, which reflects consolidation. The current reading on the fast stochastic is just above the overbought trigger level of 80, which could foreshadow a correction.

The EIA Reports Match Supply and Demand

The EIA reports strong natural gas production, as well as rapidly-rising demand, resulted in record-high production of natural gas plant liquids which reached 4.7 million barrels per day in February 2019. Because raw natural gas is processed before it is introduced into the interstate pipeline system, NGPL is recovered at natural gas processing plants and marketed as petroleum liquids, separate from dry natural gas. EIA estimates domestic demand for ethane expanded by 360,000 barrels per day in the past two years as a result of new ethylene crackers and expansions of existing facilities. EIA projects this growth in NGPL production to continue as a result of increasing US natural gas production and rising NGPL demand.