Natural Gas Price Prediction – Prices Slide Despite Warm Weather Forecast

 Key Insights

• Natural gas prices whipsawed and moved lower.
• The weather is expected to be warmer in the mid-West and South East.
• Inventory ended May 15% below the 5-year average.

On Friday, natural gas prices moved lower as strong CPI buoyed the dollar, which temporarily weighed on prices. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal throughout most of the mid-West and South East next 6-10 and 8-14 days.

U.S. natural gas inventories ended May at 2.0 trillion cubic feet, which is 15% below the five-year average. We forecast that natural gas inventories will end the 2022 injection season at just over 3.3 Tcf, which would be 9% below the five-year average.

Technical Analysis

Natural gas prices whipsawed and moved lower. Support is seen near the 50-day moving average of 7.63.

Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

Medium-term momentum has turned negative as the MACD (moving average convergence divergence) generated a crossover sell signal. This scenario 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 prints in negative territory with a falling trajectory which points to lower prices.