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Natural Gas Price Prediction – Prices Slip as Weather Forecast Moderates

Short term momentum turns negative
David Becker

Natural gas prices made a higher high and a higher low but ended the trading session on the lows of the day as trader’s rejected higher prices. The weather is expected to be much colder than normal in the mid-west and east coast over the next 6-10 days but then moderate with only colder than normal temperatures appearing. Hedge funds remain short and will not likely allow prices to push higher without significant cold weather. The supply of natural gas is on the rise according to the EIA.

Technicals

Natural gas prices eased after attempting to break higher and experiencing resistance pushing prices lower into the close. Short term resistance is seen near the January highs at 2.255. Support is seen near the 10-day moving average near 2.16. Additional support on natural gas prices can be seen by looking at a long term trend line on a weekly chart that comes in near 2.07. Momentum has now turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD index (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 a rising trajectory which points to higher prices. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal.

Supply Rose Led by Imports

The supply of natural gas increased week over week due to imports from Canada. According to data from 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 28% from last week to meet weather-related demand.

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