Natural Gas Price Prediction – Prices Rise Testing Resistance but Prices are Overbought

Natural gas prices moved higher on Tuesday as the weather is expected to remain warmer than normal throughout the west coast significantly increasing cooling demand. There are two storms in the Atlantic Ocean headed for the Caribbean. One has an 80% chance of becoming a tropical cyclone and the other a 30% chance. These storms have a trajectory that could take them into the Gulf of Mexico which could be damaging to natural gas infrastructure. This should increase volatility for natural gas prices. Supply rose in the latest week.

Technical Analysis

Natural gas prices rose on Tuesday but settled off the highs of the session. Support is seen near the 10-day moving average at 2.24. Resistance is seen near the Tuesday highs at 2.47. Short-term momentum is neutral as the fast stochastic moves sideways. The current reading on the fast stochastic is 93, well above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Supply Rose in the Latest Week

Supply increased according to data from the EIA. The average total supply of natural gas rose by 1.3% compared with the previous report week. Dry natural gas production grew by 1.2% compared with the previous report week. The average net imports from Canada increased by 2.6% from last week.