Natural Gas Price Prediction – Prices Tumble on Weak LNG Exports

Natural gas prices broke down on Tuesday, following news from the EIA that LNG exports declined substantially in 2020. The lack of demand for export in conjunction with the lack of demand for electricity has put substantial pressure on natural gas prices.

Technical Analysis

Natural gas prices dropped 2.7% on Tuesday, which was a new contract low for August. Target support is the continuation contract low at 1.55. Resistance is seen near the 10-day moving average at 1.77. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 3, well below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

LNG Exports Decline

Daily natural gas deliveries to U.S. facilities that produce liquefied natural gas for export were a record 9.8 billion cubic feet per day in late March 2020, but deliveries fell to less than 4.0 Bcf per day in June, according to the EIA. A mild winter and COVID-19 mitigation efforts have led to declining global natural gas demand and high natural gas storage inventories in Europe and Asia, reducing the need for LNG imports.