Natural Gas Price Prediction – Prices Surge Despite Warm Weather Forecast

Natural gas prices surged again on Tuesday, despite a report from the Department of Energy that showed that consumers would likely decline. According to the National Oceanic Atmospheric Administration, warmer than expected weather will cover most of the United States for the next 2-weeks.

Technical Analysis

Natural gas prices moved higher on Tuesday rising nearly 3% following a 2% rise on Monday. Target resistance is seen near the March highs at 2.91. The 10-day moving average crossed above the 50-day moving average, which means that a medium-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the current reading on the fast stochastic is 98, above the overbought trigger level of 80, which could foreshadow a correction. Medium-term momentum is also positive as the MACD (moving average convergence divergence) histogram prints in positive territory with an upward sloping trajectory which points to higher prices.

EIA Expects Consumption to Decline

EIA expects that U.S. consumption of natural gas will average 82.9 billion cubic feet per day in 2021, down 0.4% from 2020. The decline in U.S. natural gas consumption is a result of less natural gas consumed for electric power generation because of higher natural gas prices compared with last year. In 2021, the EIA expects residential and commercial natural gas consumption will rise by a total of 1.1 Bcf per day from 2020 and industrial consumption will rise by 1.4 Bcf per day from 2020.