Natural Gas Price Prediction – Prices Surge on New Storm Fears

Natural gas prices broke out again on Wednesday as a new storm threatened to become a tropical cyclone in the Gulf of Mexico. More than 90% of natural gas production in the Gulf of Mexico was offline in late August following Hurricane Ida. Hurricane Larry is headed for Bermuda but is unlikely to impact any natural gas installations. The weather is expected to remain warmer than average over the next 2-weeks.

Technical Analysis

Natural gas price broke out and hit a 7-year high t $5.05 and closed near the highs of the day. Support is seen near the 10-day moving average at 5.51. Target resistance is seen near the 2014 highs at 6.5. Prices are overbought. The RSI (relative strength index) is printing a reading of 80, above the overbought trigger level of 70, which could foreshadow a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Shut In in the Gulf Could Continue

More than 90% of natural gas production in the Gulf of Mexico was offline in late August following Hurricane Ida. Gulf of Mexicp production of marketed natural gas averaged 1.9 billion cubic feet per day in August, down 0.4 Bcf per day from July. The EIA expects that natural gas production in the Gulf will gradually come back online during the first half of September and average 1.5 Bcf per day for the month but the new storm could curtail that rebound.