Natural Gas Price Prediction – Prices Slip Despite on COVID Fears

Natural gas prices moved lower on Monday, as concerns of a prolonged closure of the US economy will reduce electricity demand. The weather is expected to be warmer than normal over the next 2-weeks helping to buoy cooling demand. There is no tropical cyclone activity in the Atlantic or the Gulf of Mexico according to NOAA. Hedge funds reduced short positions in futures and options according to the latest commitment of the trader’s report.

Technical Analysis

Natural gas prices moved lower and continue to consolidate at the lower end of the recent range. Prices gapped higher last week which now appears to be a short-covering event. Prices are hovering just below resistance near the 10-day moving average at 1.76. Target support is seen near the June lows at 1.51. Resistance is seen near the 50-day moving average near 1.89. Short term momentum is negative as the fast stochastic generated a short term sell signal. Medium-term momentum is positive to neutral as the MACD (moving average convergence divergence) histogram prints in the black with a decelerating trajectory which points to consolidation.

Hedge Funds Dump Short Positions

Hedge funds added to long position in futures and options and dropped short position in futures and options according to the most recent commitment of trader’s report released for the date ending 7/7/20. According to the CFTC, hedge funds reduced short positions by 25K contracts while adding 2K contracts to long-positions. Total open interest in the managed money category shows that hedge funds are long 260K contracts while short 238K contracts.