Natural Gas Price Prediction – Prices Rise on Strong EIA Outlook

Key Insights

• Natural gas rallied sharply.
• The weather is expected to be warmer than usual throughout the South.
• Inventories are expected to rise.

Natural gas prices rebounded sharply on Wednesday for a second straight trading session. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal during the next 6-10 days throughout most of the South. Inventories are expected to rise in the latest week.

According to survey provider Estimize, natural gas inventories are expected to rise by 66 Bcf in the latest week. The release follows 55 Bcf build-in stockpiles. The EIA reported in its short-term energy outlook that natural gas prices should average $8.4 per MMBtu for 2022.

Technical Analysis

On Wednesday, natural gas prices rebounded sharply, rallying for the second consecutive trading session. Prices recaptured resistance which now supports near the 20-day moving average at 7.32. Target resistance is seen near the May highs at $8.99.

Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal.

Medium-term momentum has turned negative. The MACD (moving average convergence divergence) generated a crossover sell signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.