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Natural Gas Price Prediction – Prices Surge on Cold Weather Report

By:
David Becker
Published: Nov 5, 2018, 19:20 UTC

Natural gas price surged higher on Monday, rising nearly 8% as much colder than normal weather is forecast to cover most of the United States for the next

Natural gas daily chart, November 06, 2018

Natural gas price surged higher on Monday, rising nearly 8% as much colder than normal weather is forecast to cover most of the United States for the next 2-weeks according to the most recent forecast from the National Oceanic Atmospheric Administration. The cold weather will arrive as the beginning of the heating season which is also the beginning of the withdrawal season. Inventories remain well below the 5-year average due to exports of natural gas from the United States that has kept up with rising supply.

Technical Analysis

Natural Gas prices surged higher on Monday, soaring 8%, and poised to test target resistance near the 2018 highs at 3.66. Support is seen near the former breakout level near the October highs at 3.24. Additional support is seen near the 20-day moving average at 3.25. 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).

Supply is Flat

According to the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 91.1 Bcf per day. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada decreased by 15% from last week and were 33% lower than last year at this time.

Demand Dipped

In the latest week, 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 2% week over week. Industrial sector consumption stayed constant, averaging 22.5 Bcf per day. In the residential and commercial sectors, consumption declined by 1%. Natural gas exports to Mexico decreased 3%, but they were 13% higher than last year at this time. U.S. liquefied natural gas exports increase week over 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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