Natural Gas Price Prediction – Prices Tumble Through Support Targeting 2019 Lows

Natural gas prices where hammered on Tuesday, despite a forecast of colder than normal weather and inventories that are 11% below the 5-year average range for this time of year. Prices pierced through support near the 10-day moving average and quickly made a beeline for lower levels. While supplies continue to rise, Baker Hughes reported on Friday that natural gas rig counts dropped by 4-rigs or 2% in the latest week.

Technical Analysis

Natural gas prices tumbled on Tuesday following the long MLK weekend. Prices tumbled through the 10-day moving average which was former support now resistance seen near 3.24. Target support on natural gas is seen near the 2019 lows at 2.87. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which reflects decelerating positive momentum.

Supply Continues to Rise

Supply rises as dry natural gas production continues to grow. According to data from the EIA the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada increased by 5% from last week as U.S. imports from Canada increased while U.S. exports to Canada declined.

Demand Rose

Demand rises amid cooler temperatures. Total U.S. consumption of natural gas rose by 18% compared with the previous report week, according to data from te EIA. Natural gas consumed for power generation rose 14%. Industrial sector consumption increased 5% week over week. In the residential and commercial sectors, consumption increased 30%, averaging 46.9 Bcf per day during the report week as winter weather swept through most of the Lower 48 states. Natural gas exports to Mexico declined 1% week over week, averaging 4.7 Bcf per day for the report week.