Natural Gas Price Prediction – Prices Rise to Test Resistance

Natural gas prices continued to chop sideways, rising on Tuesday as warmer than normal weather is expected to cover most of the U.S. over the next 2-weeks. Despite the lackluster demand seen in the first 4-months of 2021, electrical generation for electricity has also declind allowing prices to remain stable.

Technical Analysis

Natural gas prices moved higher on Tuesday but continue to trade in a tight range. Prices moved back above resistance which is now support near the 10-day moving average at 2.94. Target resistance is seen near the February highs at 3.06. Target support is seen near the 50-day moving average at 2.74. Short-term momentum has flipflopped and turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This 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).

Natural Gas Fired Electricity Generation Declines

According to data from the EIA, in the first four months of 2021, natural gas-fired generation in the Lower 48 states averaged 3,394 gigawatthours per day. This is a decline of nearly 7% compared with the same period a year ago. This year’s decline is the first year-over-year decline in natural gas generation during this period since 2017. The decline in natural gas-fired generation is a result of higher natural gas prices and increased competition from renewables. Total electricity generation during the period increased 6.6% compared with 2020, which is primarily attributable to colder winter weather.