Natural Gas Price Prediction – Prices Whipsaw and Fall as Demand Drops

Natural Gas prices moved lower on Wednesday, whipsawing and closing near the session lows.  This comes ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 50 Bcf build-in stockpiles according to survey provider Estimize. The weather is expected to be colder than normal throughout most of the midwest for the next 6-10 days. There is snow expected in the mountains which should increase heating demand.

Technical Analysis

Natural Gas prices closed on the session lows after making a higher high which is a sign of rejection. Support is seen near the 10-day moving average at 2,56. Resistance is seen near the 50-day moving average at 2.73. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Demand Falls

Demand for U.S. natural gas fell in all sectors except for deliveries to LNG facilities. According to the EIA total U.S. consumption of natural gas fell by 2.0% compared with the previous report week. Natural gas consumed for power generation declined by 4.0% week over week. Industrial sector consumption decreased slightly by 0.6% week over week. In the residential and commercial sectors, consumption declined by 1.2% as a result of mild temperatures.