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Natural Gas Price Prediction – Prices Rise Forming Bull Flag Pattern

By:
David Becker
Published: Aug 7, 2020, 18:47 UTC

The weather is expected to remain warmer than normal

Natural Gas Price Prediction – Prices Rise Forming Bull Flag Pattern

Natural gas prices rebounded on Friday rising 3% and forming a bull flag continuation pattern which is a pause that refreshes higher. Prices were up a robust 24% for the week. The weather is expected to remain warmer than normal for the next 6-10 and 8-14 days according to NOAA. There is one disturbance in the Atlantic that has a 10% chance of becoming a tropical cyclone according to NOAA. The U.S. rig count fell by four to an all-time low of 247 in the week to August 7, according to from energy services firm Baker Hughes Co going back to 1940.

Technical Analysis

Natural gas prices rallied 3% forming a bull flag pattern which is a continuation pattern that will likely refresh. The 10-day moving average crossed above the 50-day moving average which means that a short-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 92, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Supply declines

The average total supply of natural gas fell by 0.2% compared with the previous report week according to the EIA. This decline was driven by a decrease in dry natural gas production of 0.7% compared with the previous report week. Average net imports from Canada increased by 10.0% from last week.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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