Natural Gas Price Prediction – Prices Rise Led by Lower Production Forecast

Natural gas prices rebounded for the second consecutive trading session following Thursday’s larger than expected decline in natural gas inventories. This comes despite a weather forecast that shows that the US’s climate is expected to be warmer than normal over the next two weeks, likely reducing heating demand. There are no disturbances that are expected to turn into tropical cyclones over the next 48-hours according to NOAA.

Technical Analysis

Natural gas prices rallied 2% but was nearly unchanged for the week. Prices are poised to test resistance near the 10-day moving average ate 2.60. Support is seen near the December lows at 2.36. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The RSI moved out of oversold territory with an upward trajectory which points to accelerating positive momentum.

The EIA Forecasting Production will be Lower

EIA forecasts U.S. dry natural gas production will average 90.9 Bcf/d in 2020, which is down from an average of 93.1 Bcf/d in 2019. In the forecast, monthly average production falls from a record 97.0 Bcf/d in December 2019 to 87.1 Bcf/d in April 2021 before increasing slightly. EIA forecasts dry natural gas production in the United States to average 87.9 Bcf/d in 2021. EIA expects production to begin rising in the second quarter of 2021 in response to higher natural gas and crude oil prices. The increase in crude oil prices is expected to raise associated gas production from oil-directed wells in late-2021, especially in the Permian region.