Natural Gas Price Prediction – Prices Slip as Demand is Flat

Natural gas prices rebounded from session lows, but still closed in the red. For the first time in recent memory, there are several storms brewing which could turn into a hurricane. There is a wave that is sitting off the coast of Florida that the National Oceanic Atmospheric Administration believes has a 70% chance of turning into a tropical cyclone. Additionally, there is a disturbance in the southern Atlantic that is moving toward the United States which NOAA gives a 40% chance at becoming a tropical cyclone. The weather in the US is expected to be colder than normal throughout most of the mid-west, which will reduce cooling demand and increase heating demand.

Technical Analysis

Natural gas prices rebounded from session lows to close above an upward sloping trend line that comes in near 2.15. Short term resistance is seen near the 10-day moving average at 2.18. Short term momentum is negative as the fast stochastic recently generated a crossover sell signal. Medium-term momentum is negative to neutral as the fast stochastic is printing in the black with a declining trajectory which points to a potential crossover sell signal.

Supply Rise and Demand is Flat

Supply was flat in the latest week according to the EIA. The average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 9% from last week, with increased demand in the Northeast. Flows into Upstate New York on the Iroquois Pipeline at Waddington averaged 0.42 Bcf per day according to the EIA for the report week, up from 0.15 Bcf per day. Import volumes reached 0.75 Bcf on Monday, the highest daily volume since March 2019. In addition, Enbridge’s Westcoast pipeline increased deliverability on its system as of August 20, resulting in U.S. imports rising from 0.6 Bcf/d to 0.8 Bcf per day.

Demand is flat. Total US consumption of natural gas was unchanged from the previous report week, averaging 70.7 Bcf per day according to data from the EIA. Natural gas consumed for power generation declined by 1% week over week. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 2%. Natural gas exports to Mexico increased 1%.