Natural Gas Price Prediction – Prices Tumble Ahead of Inventory Report

Natural gas prices moved lower on Monday, dropping 2.6%, and testing the June lows. This comes ahead of Thursday inventory report from the Department of Energy. Expectations are that inventories will climb 104 Bcf. Inventories have been rising at an accelerated pace and could quickly reach the mean of the 5-year range.

Technical Analysis

Natural gas prices tumbled on Tuesday dropping 2.6% and poised to test support near the June lows at 2.30. A close below this level could lead to a test of the 2016 lows at 1.91. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading of 5, is well below the oversold trigger level of 20 which could foreshadow a correction. Medium term momentum remains positive as the MACD (moving average convergence divergence) index recently generate 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).

Natural Gas Exports Continue to Rise

US natural gas exports averaged 9.9 Bcf per day in 2018, and EIA forecasts that they will rise by 2.5 Bcf per day in 2019 and by 2.9 Bcf per day in 2020. Rising exports reflect increases in liquefied natural gas exports as new facilities come online. Rising natural gas exports are also the result of an expected increase in pipeline exports to Mexico. For the week ending June 7, working natural gas in underground storage totaled 2,088 billion cubic feet 9.9% lower than the five-year average for this week. According to data from the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 93.8 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 1% from last week.