Natural Gas Price Prediction – Prices Slip as Demand Drops

 

Natural gas prices eased slightly less than 1% on Tuesday, as the weather on the east coast is expected to remain warmer than normal for the next 2-weeks. The weather in the west is expected to get much colder, while the mid-west is expected to remain normal. The change to colder in the weather will only take a toll if it continues to move east. Demand fell in the latest week driven by declines in the residential sector.

Technicals

 

 

 

 

Natural gas prices slipped on Tuesday and continue to consolidate in a tight range. Target support is seen near the 2016 lows at 1.61. Resistance to natural gas prices is seen near the 10-day moving average at 1.87. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to lower prices. Short term momentum is neutral as it continues to flip flop between buy and sell signal. The current reading on the fast stochastic is 3, well below the oversold trigger level of 20, which could foreshadow a correction. The RSI (relative strength index) is also in oversold, territory. The current reading is 26, below the oversold trigger level of 30, which could foreshadow a correction.

Demand Dropped Last Week

Demand declined last week driven by residential and commercial sectors. The EIA reports that the consumption of natural gas fell by 10% compared with the previous report week. In the residential and commercial sectors, consumption declined by 15% with the return of unseasonably warm weather. Natural gas consumed for power generation declined by 6% week over week. Industrial sector consumption decreased by 3% week over week.