Natural Gas Price Prediction – Prices Trade Sideways but Momentum Turns Negative

Natural gas prices moved sideways on Tuesday moving slightly lower after testing resistance. Colder than normal weather is forecast to cover most of the United States for the next 6-10 and 8-14 days which should increase heating demand. Inventory levels remain well below the 5-year average range and expectations are for stocks to decline by 34 Bcf in the latest week according to Estimize. A stronger dollar could weigh on prices as the Fed moves to raise rates.

Technical Analysis

Natural gas prices edged lower on Tuesday declining slightly after testing resistance near the 10-day moving average at 4.37. Support on natural gas is seen near the weekly lows at 3.99. Additional support is seen near the breakout level at 3.66. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Gas Stocks are Low

Working gas stocks’ deficit to the five-year average and deficit to the bottom of the five-year range decrease. In the Lower 48 states, total working gas stocks are 359 Bcf lower than the five-year minimum, and every storage region is currently lower than the bottom of the five-year range. The deficit to the bottom of the range decreased in all regions except the South Central nonsalt region. As of this report week, the Midwest region is 69 Bcf lower than the five-year minimum, and the South Central region including both salt and nonsalt facilities is 145 Bcf lower than the five-year minimum.

Fed Could Be Close to Neutral

Federal Reserve Vice Chairman Richard Clarida expressed a cautious view Tuesday about how the central bank should proceed in raising interest rates. He said in a speech delivered to bankers in New York, emphasized the importance of policymakers being data dependent. His speech did not mention the current volatility. Instead, he gave a mostly glowing view of the economy and said he expects strong growth with moderate inflation to continue.