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Natural Gas Price Prediction – Prices Tumble on Warm Weather Forecast

By:
David Becker
Published: Sep 29, 2020, 17:21 GMT+00:00

Demand rose in the latest week

Natural Gas Price Prediction – Prices Tumble on Warm Weather Forecast

Natural gas prices tumbled more than 8% on Tuesday as the weather forecast turns milder and traders looked for the exit. Demand increased in the latest week as colder weather buoyed consumption in both residential and commercial buildings. The weather is now expected to be warmer than normal throughout the west which should weigh on natural gas prices. There are no tropical cyclones expected to form in the Atlantic Ocean or Gulf of Mexico over the next 48-hours according to NOAA.

Technical Analysis

Natural gas prices moved lower on Tuesday dropping 8.5% but holding just above support near an upward sloping trend line that comes in near 2.53. A break of that level would see prices test 2.50 and then 2.25. Medium term 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. Short-term momentum has also turned negative as the fast stochastic also generated a crossover sell signal.

Demand Rose in the Latest Week

Demand rises, driven by use in buildings. Total U.S. consumption of natural gas rose by 1.0% compared with the previous report week, according to data from the EIA. Natural gas consumed in the residential and commercial sectors increased by 2.3 Bcf/d, or 27.9%, week over week amid cooler temperatures on the East Coast. Power generation declined by 6.7%. Industrial sector consumption increased by 2.3% week over week. Natural gas exports to Mexico increased 3.9%.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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