Natural Gas Price Prediction – Prices Slip as Production Continues to Rise

Natural gas prices edged lower on Tuesday, but appear to have held support levels. Warmer than normal weather is expected to cover most of the US for the next 8-14 days according to the National Oceanic Atmospheric Administration. Production is expected to rise in 2019 and 2020 according to the Energy Information Administration.

Technical Analysis

Natural gas prices slipped on Tuesday, moving down toward support near the 10-day moving average at 2.687. A break of this level could lead to a test of the February lows at 2.55. Resistance on natural gas is seen near the March highs at 2.87. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices and accelerating positive momentum. The fast stochastic continues to move higher, after recently generating a crossover buy signal in oversold territory which reflects accelerating positive momentum.

The EIA Forecast Production Will Rise

EIA forecasts that dry natural gas production will average 91.0 billion cubic feet per day in 2019, up 7.6 Bcf per day from 2018. EIA expects natural gas production will continue to grow in 2020 to an average of 92.5 Bcf per day. EIA estimates that natural gas inventories ended March at 1.2 trillion cubic feet, which would be 17% lower than levels from a year earlier and 30% lower than the five-year average. EIA forecasts that natural gas storage injections will outpace the previous five-year average during the April-through-October injection season and that inventories will reach 3.7 Tcf at the end of October, which would be 13% higher than October 2018 levels but 1% lower than the five-year average.