Natural Gas Price Prediction – Prices Slide Through Support Despite Cold Weather

Natural gas prices moved lower on Friday, pushing through support near 2.87 and bouncing near target support which is equal to the September 2018 lows.  The polar vortex was not enough to hold prices up as traders instead focused on the warmer weather that is expected to cover most of the United States beginning this weekend. The 6-10 and 8-14 day forecast are for colder than expected weather through out the west and mid-west and warmer than normal weather across most of the east coast.

Technical Analysis of Natural Gas

Natural gas prices moved lower breaking through support levels which is now seen as resistance near 2.87. Supports is seen near the September 2018 lows at 2.73.  Resistance above 2.87 is seen near the 10-day moving average at 3. Momentum has turned negative as the MACD (moving average convergence divergence) index recently 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). The market is oversold. The fast stochastic is printing a reading of 1, well below the oversold trigger level of 20 which could foreshadow a correction.

The Cold Weather Should Have Created Huge Draws in Inventories

Polar vortex prompts utility companies to ask customers to conserve natural gas. Consumers Energy which supplies natural gas to 4.1 million Michigan customers, issued a notice on Wednesday, January 30 asking industrial and residential/commercial customers to temporarily reduce natural gas consumption during the cold weather event and following a fire at a natural gas compressor station in Southeastern Michigan according to the Energy Information Administration. As a result of the request, General Motors halted operations at 11 Michigan plants to conserve natural gas. Residential and commercial users were asked to set thermostats to 65 degrees Fahrenheit to ensure deliverability to critical facilities such as hospitals.