Natural Gas Price Prediction – Prices Tumble to Support Despite Frigid Weather

Natural Gas Tumbles as Long Term Weather Forecast Turns Warmer
David Becker
Natural Gas

Natural gas prices tumbled on Monday as the longer term forecast turned to warmer weather.  This comes despite frigid weather which is expected to cover most of the mid-west for the next 5-days. Demand is on the rise and the weather is expected to produce greater than normal heating days over the next weeks but then turn milder.

Technical Analysis

Natural gas prices tumbled 8% and seemed to hold near support which is an upward sloping trend line that comes in near 2.87. Prices opened where they closed which is a sign of some indecision. The gap down is negative. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.  Medium term momentum is flat and is turning negative as the MACD (moving average convergence divergence) line is poised to generate a crossover sell signal. The MACD histogram is printing near the zero index level with a declining trajectory which points to lower prices.

Demand Continues to Rise as the Weather is Colder than Normal

Demand rises amid cold temperatures, which is boosting heating demand. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation was flat, averaging 25.3 Bcf per day. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 8% as cold temperatures spurred heating demand. Natural gas exports to Mexico increased 1%.

Supply falls during the latest week. According to data from the EIA, the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada decreased by 6% from last week.  Expectations are for supply to edge lower according to the latest down tick in the Baker Hughes Rig Count.

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