Natural Gas Price Prediction – Prices Surge as Momentum Turns Positive

Natural gas prices rallied sharply on Monday rising more than  3% recapturing resistance which is now support. There are two tropical storms in the Atlantic one with a 90% chance that it will turn into a tropical cyclone. There is also one storm in the Gulf of Mexico with a 10% chance of becoming a tropical cyclone. The disturbance in the Atlantic could make their way across the Atlantic and generate production issues. The weather is expected to remain normal for the next 8-14 day, keeping natural gas heating demand subdued.

Technical Analysis

Natural gas prices rallied sharply rising more than 3% and recapturing resistance which now supports near the 10-day moving average at 2.275. Support on natural gas is seen near the October lows at 2.18. Short term momentum has flipped and turned positive in oversold territory as the fast stochastic generated a crossover buy signal. Additionally, the current reading on the fast stochastic is 26, above the oversold trigger level of 20 which points to accelerating positive momentum. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Supply Slips in Recent Week

The Energy Information Administration reports that supply is down. The EIA reveals that the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week. The average net imports from Canada decreased by 3% from last week. Total U.S. consumption of natural gas fell by 3% compared with the previous report week, according to the EIA. Natural gas consumed for power generation declined by 6% week over week because of overall lower cooling demand.