Natural Gas Price Prediction – Prices Whipsaw as Weather Buoys Demand

Natural gas prices whipsawed on Monday initially opening and moving higher, notching up a fresh 4.5-month high at 3.05. Prices have been buoyed as warmer than normal weather is expected to cover most of the United States for the next 8-14 days. Prices then turned tail moving down losing 2.25%.  Prices found support near the 10-day moving average at 2.94.  Resistance is seen near the daily highs at 3.05. Additional resistance is the 50% Fibonacci retracement level which is calculated from the highs in January to the lows in February and comes in near 3.10. Momentum is neutral as the MACD (moving average convergence divergence) histogram is printing near the zero-index level with a flat trajectory which reflects consolidation. The RSI (relative strength index) which is a momentum oscillator, moved lower turning back into the neutral range which reflects consolidation.

The EIA reported that net injections rose higher than the five-year average

The EIA reported that net injections rose higher than the five-year average. Net injections into storage totaled 96 Bcf for the week ending June 8, compared with the five-year average net injection of 91 Bcf and last year’s net injections of 82 Bcf during the same week. Net injections averaged 13.7 Bcf per day. Net injections will have to average 12.6 Bcf per day for the remainder of the refill season to match the five-year average level (3,815 Bcf) by October 31. Working gas stocks totaled 1,913 Bcf, which is 507 Bcf lower than the five-year average and 785 Bcf lower than last year at this time.

Pipeline Capacity Constraints have Yet to Affect the North East

Although a reduction in pipeline takeaway capacity can affect natural gas production if supply no longer has a means of getting to market, production levels in the Northeast have so far been unaffected. The EIA estimates that dry production in Pennsylvania, Ohio, and West Virginia was essentially unchanged from June 6 to June 12, averaging a little more than 27 Bcf per day.