Natural Gas Price Prediction – Prices Stabilize As Tropical Weather Brews

National gas prices declined on Friday, but finished well of the lows of the session.  Ahead of the weekend a tropical depression is forming just outside of the Gulf of Mexico.  The weather in the US is expected to be colder than normal over the next 2-weeks which should decelerate injections ahead of the beginning of the withdrawal season.

Technical Analysis

Natural gas prices closed down by 0.5%, but were lower earlier in the trading session. Prices bounced at support near the 10-day moving average at 3.10.  Resistance is seen near the October highs at 3.26.  Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The RSI has reversed course dropping from overbought territory above the 70 region which reflects decelerating positive momentum.

Tropical Weather Makes and Appearance

While most traders are focused on the colder weather that is expected to cover most of the mid-west for the next 8-14 days, there is a tropical depression that could form by late this weekend or early next week over the northwestern Caribbean Sea or Gulf of Mexico while the system moves northwestward to northward.

Supply is Stable

According to the Energy Information Administration, the average total supply of natural gas remained the same as in the previous report week, averaging 89.3 billion cubic feet per day Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 5% from last week.

Overall demand decreases with lower power generation

Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to the EIA. Natural gas consumed for power generation declined by 6% week over week. Industrial sector consumption increased by 1% week over week. Temperatures were close to normal across much of the Lower 48 states, but warmer than normal in the Southeast and Southwestern regions and cooler than normal across the Great Plains.