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Natural Gas Price Prediction Prices Tumble Breaking Down to Fresh Lows

Weekly momentum has turned negative
David Becker

Natural gas prices tumbled lower on Friday breaking down and closing below trend line support. Prices dropped nearly 9% on the week, as colder than normal weather quickly faded. The EIA reports that production will exceed consumption in 2020, and put further downward pressure on prices. The weather is expected to become warmer than normal over the next 6-10 days and then to moderate but remain warmer than normal over the next 8-14 days. Demand declined in the latest week driven by contraction in the need for power.

Weekly natural gas prices broke down as the Feb contract fell nearly 9%. Prices broke through trend line support and appear to be headed for the 2016 lows near 1.61. Short term resistance is seen near the weekly breakdown level at 2.03.

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-week moving average minus the 26-week moving average) crosses below the MACD signal line (the 9-week moving average of the MACD line).

Demand Declined in the Latest Week

Demand declined in the latest week primarily in power and buildings sectors. Total US consumption of natural gas fell by 3% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 3% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 4%.

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