Natural Gas Price Prediction – Prices Slip but Rebound from Lows

Natural gas rebounded from session lows forming a doji day on Tuesday which is a sign of indecision. Prices made a lower low and a lower high, and a new low for the February contract.  Hedge funds continued to add to short position in futures and options as managed money continues to bet on lower natural gas prices. The weather in the US is expected to be normal for the next 6-10 and 8-14 days according to the latest forecast from the National Oceanic Atmospheric Administration.

Technicals

Natural gas prices declined on Tuesday but closed well off the session lows. Prices test the December continuation contract lows at 2.15. Resistance is seen near the 10-day moving average near 2.24. The choppy natural of price action has made it so momentum is negative to neutral. The MACD (moving average convergence divergence) index is poised to generate a crossover sell signal. The MACD histogram is printing in the black with a flat trajectory which points to consolidation. The fast stochastic generated a crossover sell signal, and is now printing a reading of 14, below the oversold trigger level of 20 which could foreshadow a correction.

Demand Rises

Demand rises, driven by power generation and buildings sectors. Total US consumption of natural gas rose by 7% compared with the previous report week, according to the EIA. Natural gas consumed for power generation climbed by 7% week over week. Industrial sector consumption increased by 5% week over week. In the residential and commercial sectors, consumption increased by 7%. Natural gas exports to Mexico were the same as last week, averaging 5.3 Bcf  day.