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Natural Gas Price Prediction – Prices Surge on Trade Tariff Relief Rally

By:
David Becker
Published: Sep 18, 2018, 19:45 UTC

Natural gas prices surged higher on Tuesday as traders generated a relief rally which was predicated on the less than expected tariff on US imports that

Natural Gas

Natural gas prices surged higher on Tuesday as traders generated a relief rally which was predicated on the less than expected tariff on US imports that expected. Traders had expected a 25% tariff and instead only saw China announce a 10% tariff. While volumes of current contracted gas would not have been effected, new plants would likely been for less volume making LNG plants built in the future less attractive.  There are no storms in the Atlantic or Caribbean that would alter the production of natural gas in the Gulf of Mexico, which has reduced volatility.

Technical Analysis

Natural gas prices surged higher rising nearly 4% on Tuesday. Price are poised to test resistance near a downward sloping trend line that comes in near 2.97.  Support on natural gas is seen near the 50-day moving average at 2.84. 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).

Injections Remain Below Average

The EIA recently reported that net injections are less than the five-year average. Net injections into storage totaled 69 Bcf for the week ending September 7, compared with the five-year average net injections of 74 Bcf and last year’s net injections of 87 Bcf during the same week. Injections are expected to rise to 78 Bcf in the coming week according to Estimize. This would still keep injection below the lower end of the 5-year range.

The average rate of net injections into storage is 16% lower than the five-year average so far in the 2018 refill season. If the rate of injections into working gas matches the five-year average of 10.8 Bcf per day or the remainder of the refill season, total inventories will be 3,219 Bcf on October 31, which is 341 Bcf lower than the five-year low of 3,560 Bcf.

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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