Natural Gas Price Prediction – Prices Surge on Warm North-West Weather Forecast

Natural gas prices rallied sharply for a 5^th consecutive trading session. The weather remains stuck in a pattern where there is warmer than normal weather in the west and east coasts and cooler than normal weather in the south. According to the National Oceanic Atmospheric Administration, there is one storm in the Atlantic, moving from Africa with a 20% chance of turning into a tropical cyclone in the next 48-hours. Dropical depression 4 is expected to make landfall in South Carolina and move inland.

Technical Analysis

Natural gas prices continued to rally after breaking out and notching up a 2.2% finish for the session after rallying 8.5% last. Support is seen near the 10-day moving average near 3.34. Resistance is seen near the 2019 highs at 3.72. Short-term momentum is turning negative which is surprising as the fast stochastic generated a crossover sell signal. Prices are overbought as the fast stochastic is printing a reading of 88, well above the overbought trigger level of 80 which foreshadows a correction. Medium-term 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).

The weather appears to be the driving factor behind the recent upward movement in natural gas prices. Exports are on the rise, and industrial activity is returning, but the current weather pattern for much hotter than normal weather coming out of the North West, is driving up the demand for natural gas turbined electricity.