Natural Gas Price Prediction – Prices Rise but Remain in Downtrend

Natural gas prices rebounded on Thursday as the dollar moved lower and buoyed the energy sector. Prices still remain in a downtrend despite an increase in natural gas-fired generation in the US in the first half of 2020. There is a new low-pressure system entering the Gulf of Mexico which has a 30% chance of turning into a tropical cyclone according to the NOAA. The weather is expected to remain warmer than normal over the next two weeks.

Technical Analysis

Natural gas prices moved higher on Tuesday rising 1.6% but remaining in a downtrend. Resistance is seen near the 10-day moving average at 1.74. Support is seen near the July lows at 1.60. Medium term momentum is negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal.

Natural Gas Generation Increased in the H2 of 2020

Natural gas-fired generation in the US rose 9%, in the first half of 2020. Natural gas was the fastest-growing source of electric power generation, according to data from the EIA. The increase in natural gas-fired generation, which is the result of recent low prices and natural gas-fired power capacity additions, comes despite a 5% decline in total electricity generation. The decrease in electricity consumption is partially attributable to reduced business activity as a result of COVID-19 mitigation efforts.