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Natural Gas Price Prediction – Prices Slip Despite Chilly Weather Forecast

By:
David Becker
Published: Jan 21, 2019, 15:24 UTC

Natural gas prices dropped on Monday, in a shorten session due to the US MLK holiday. Prices retraced some of the gains experienced in the tail end of the

Natural Gas

Natural gas prices dropped on Monday, in a shorten session due to the US MLK holiday. Prices retraced some of the gains experienced in the tail end of the Friday session ahead of the long weekend. Colder than normal weather is expected to cover most of the mid-west and east coast for the next 2-week which should substantially reduce inventories. The prediction from the National Oceanic Atmospheric Administration shows that some areas of the mid-west will experience brutal temperatures. Heating demand will be increase significantly putting downward pressure on inventories.

Technical Analysis

Natural gas prices found support near the 10-day moving average at 3.27 and bounce. Prices ran into resistance which is the first Fibonacci retracement level near 3.65. 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 fast stochastic shows momentum is neutral as the index is printing in near the zero index level with a flat trajectory.

Supplies increased according 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 18% from last week as U.S. imports from Canada increased while U.S. exports to Canada declined.

Demand is Rising on Cooler Temperatures

The EIA reports that demand rises amid cooler temperatures. Total U.S. consumption of natural gas rose by 18% compared with the previous report week, according to data from the EIA, averaging 97.2 Bcf per day. Natural gas consumed for power generation rose 14%. Industrial sector consumption increased 5% week over week. In the residential and commercial sectors, consumption increased 30%, averaging 46.9 Bcf per day during the report week as winter weather swept through most of the Lower 48 states. Natural gas exports to Mexico declined 1% week over week, averaging 4.7 Bcf per day for the report week.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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