Natural Gas Price Prediction – Prices Tumble Through Support

Natural gas prices moved lower on Monday break down through support levels as a rise in demand was offset by higher production. The weather over the next 8-14 days is expected to be mild which will likely reduce natural gas as usage. While demand increased over the past week, supply also increased allowing inventories to rise.

Technical Analysis

Natural prices tumbled through support levels breaking down and likely to test support near the May 2016 lows at 1.91. Resistance is seen near former support near the 10-day moving average at 2.56. Medium term momentum has turned negative as the MACD (moving average convergence divergence) index recently 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. The fast stochastic has tumbled reflecting short term accelerating negative momentum. The current reading on the fast stochastic is 6 which is above the oversold trigger level of 20 which could foreshadow a correction.

Natural Gas Demand Rise but is Offset by Rising Supply

Demand for natural is rising driven by the electric power sector. Total US consumption of natural gas rose by 2% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 12% week over week with increased demand for cooling. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption declined by 10%. Natural gas exports to Mexico increased by 5%