Natural Gas Price Prediction – Prices Rise on Tropical Storm Fears

Natural gas prices moved higher on Monday as Tropical storms Gamma and Delta formed in the Gulf of Mexico. Both storms have the potential to cause damage to natural gas infrastructure which is while they are the markets have become volatile. The weather is expected to be warmer than normal over the next 2-weeks which should reduce heating demand. Hedge funds reduced both long and short positions in futures and options according to the latest commitment of the trader’s report released for the date ending September 29, 2020.

Technical Analysis

Natural gas prices surged nearly 10% on Monday as tropical storm activity in the Gulf of Mexico buoyed prices. The rise pushed prices to resistance near the 50-day moving average at 2.73, which was held. Short-term support is seen near the 10-day moving average at 2.66. Short term momentum has turned positive as the RSI rebounded sharply near support levels. Medium-term momentum is turning neutral as the MACD (moving average convergence divergence) histogram is printing in negative territory with an upward sloping trajectory which points to consolidation.

Hedge Funds Reduced Long and Short Positions

According to the latest commitment of traders report released for the date ending 9/29/20, hedge funds reduced both long and short positions in futures and options. According to the CFTC, managed money reduced short positions by nearly 20K contracts while reducing long positions by 7K contracts. Open interest that is long futures and options outnumbers open interest that is short futures and options by 113K contracts.