Natural Gas Price Prediction – Prices Slip but Are Poised to Continue to Rise

Natural gas prices slipped on Friday but ended the week up 1.82%. Prices were buoyed by a colder than normal weather forecast. According to the National Oceanic Atmospheric Administration, the weather is expected to remain colder than normal for the next 6-10 and 8-14 days. Cold weather generally increases heating demand. Prices rose on Thursday following a larger than expected draw in natural gas inventories. The EIA reported that inventories declined by 177 Bcf, compared to the 167 Bcf draw expected.

Technical Analysis

Natural gas prices eased on Friday, slipping approximately 0,25%. Support is seen near the 10-day moving average at 2.64. Resistance is seen near the former breakdown level at 2.87. Additional resistance is seen near the 50-day moving average at 3.09. Medium term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory. This points to higher prices. The fast stochastic continues to rise which reflects accelerating short-term momentum. The current reading of 63, is in the middle of the neutral range and reflects consolidation.

Supply Increased This Week

Supply is rising according to the EUA. The average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1%, primarily from increases in the Northeast. Average net imports from Canada increased by 2% as import volumes rose into both the western United States and the Midwest.

Demand is Declining

Demand is falling but could rise as the weather turns colder. Total U.S. consumption of natural gas fell by 2% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 4% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 2% as temperatures across the country generally increased across the eastern and central United States. Natural gas exports to Mexico decreased by 3%.