Natural Gas Price Prediction – Prices Whipsaw Ahead of Inventory Report

Natural gas prices reversed Tuesday’s gains and continues to trade sideways in a relatively wide range. Prices dumped 1.2%, following Tuesday 2.5% rally and Monday’s 3% decline. Cooler than normal weather is expected to cover most of the mid-west and east coast for the next 2-weeks which should put a floor under prices.  Support decreased slightly last week which demand from colder than normal weather buoyed prices. Prices are rangebound ahead of Thursday’s EIA inventory report which is expected to show an increase of 51 Bcf according to Estimize.

Technical Analysis

Natural gas prices dropped on Wednesday ahead of Thursday inventory report. Resistance is seen near the 10-day moving average at 3.21. Support is seen near the 50-day moving average at 3.015. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs when 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 declining trajectory which points to lower prices.

Supply decreases slightly

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 remained constant week over week. Average net imports from Canada decreased by 14% from last week following the explosion on Enbridge’s Westcoast Energy pipeline.

U.S. liquefied natural gas exports increase week over week. Five LNG vessels  with a combined LNG-carrying capacity of 16.9 Bcf departed the United States from October 11 to October 17. One tanker was loading at Sabine Pass on Wednesday. The Cove Point liquefaction terminal did not have any LNG exports last week; however, the facility has completed its scheduled maintenance, and it resumed receiving natural gas feedstock deliveries by pipeline on October 12. Feedstock deliveries to Cove Point averaged 0.4 Bcf/d through Wednesday.