Natural Gas Price Prediction – Prices Tumble on Warm Weather Forecast

Natural gas prices slumped lower on Monday as warmer than normal weather is now expected to follow the colder weather during the next 8-14 days.  Prices whipsawed and were down more than 7.5% at one point during the session. Stronger than expected manufacturing data released in the US helped buoy prices.

Technical Analysis

Natural gas prices whipsawed but moved lower closing off the lows of the session. Prices sliced through support near the 10-day moving average at 4.35. Support is seen near last weeks lows at 3.99. Resistance is seen near the November highs at 4.92. 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. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices for natural gas. The fast stochastic also generated a crossover sell signal which points to accelerating negative momentum.

Manufacturing Was Stronger than Expected

U.S. manufacturing activity picked up in November, according to the Institute of Supply Management. ISM’s U.S. manufacturing index rose to 59.3 in November from 57.7 in October, topping expectations for a reading of 57.6. The prices paid subindex fell to 60.7 from 71.6 which is below estimates of 70 and shows that inflation is easing. Gauges of new orders and employment rose.

Separately, The Commerce Department said total construction spending fell 0.1% to $1.31 trillion in October, compared to forecast outlays rising 0.4%. The figure rose 4.9 percent on a year-over-year basis. The Commerce Department also revised its September construction figure, previously reported as unchanged, to show a 0.1% decline. Private construction spending fell by 0.4% in October, compared to 0.4% growth a month earlier. Private residential outlays dipped 0.5% to the lowest since November 2017.