Natural Gas Price Prediction – Prices Trade Sideways Despite Rising Demand

Natural gas prices were nearly unchanged on Friday, moving sideways just below resistance near the 2.87 level. Despite robust demand and a larger than expected decline in natural gas inventories, prices continue to face headwinds. Supply remains flat. The weather over the next 6-10 days is expected to be colder than normal throughout the west and mid-west and warmer than normal in the east. The cold weather is expected to shift eastward for the 8-14 day forecast according to the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices traded sideways on Friday, and continue to consolidate. Friday’s range was less than 0.04 per MMBtu. Resistance is seen near the February highs at 2.91. Support is seen near the 10-day moving average at 2.85. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation. The fast stochastic is also moving sideways, and is printing a reading of 86, which is above the overbought trigger level of 80 and could foreshadow a correction.

Demand Rises

Demand rises sharply amid cold weather. Cold temperatures led to total US consumption of natural gas to rise by 11% compared with the previous report week, according to data from the EIA. Total U.S. consumption averaged 100.2 Bcf per day for the week, 32% higher than the same week last year. The residential and commercial sectors saw the largest increases as consumption rose by 16%. Natural gas consumed for power generation climbed by 9% week over week. Industrial sector consumption increased by 5% week over week. Natural gas exports to Mexico decreased by 1%. Total daily demand has exceeded 100 Bcf since February 24.

Supply remains flat as Canadian imports rise, offsetting production declines. According to data from the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 93.9 Bcf/d. Dry natural gas production decreased by 1% compared with the previous report week as cold temperatures potentially affected production. Average net imports from Canada increased by 17% from last week.