Natural Gas Price Prediction – Prices Rise But Face Headwinds

Natural gas prices were higher mid-day in the US. Prices are attempting to take out overhead resistance, but continue to face selling pressure. Demand decreased in the latest week, along with LNG exports. Prices are moving higher following Thursday’s in line inventory decline and colder than normal weather which is expected to cover most of the United States for the next 2-weeks.

Technical Analysis

Natural gas prices are attempting to take out resistance near former support now resistance at 2.87. If prices are able to close above this level, the new range would be 3.60 to 2.87. Momentum is neutral to positive as the MACD (moving average convergence divergence) histogram is printing in the black but the trajectory is moving sideways which reflects the beginning of consolidation. The fast stochastic whipsawed and generated a crossover buy signal which reflects accelerating positive momentum. The current reading of 83, is above the overbought trigger level of 80 which could foreshadow a correction.

Demand Declined in the Latest Week

Demand decreased and total US consumption of natural gas fell by 3% compared with the previous report week, according to the EIA. Natural gas consumed for power generation declined by 3% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 3%. Natural gas exports to Mexico increased by 2%.

U.S. LNG exports decrease week over week. Eight LNG vessels with a combined LNG-carrying capacity of 27.9 Bcf departed the United States from February 20 to February 27, according to shipping data compiled by the EIA.

Manufacturing Slipped Which Could Weigh on Prices

The Institute of Supply Management reported that US manufacturing decelerated in February. The index slipped to 54.2 in February from 56.6 in January. Expectations were for the index to slip to 55.5 in February. The reading was the weakest since November 2016. A decline in new orders, production, employment and prices all contributed to the decline.