Natural Gas Price Prediction – Strong IP Fails to Buoy Prices

David Becker
Gold Bars and Dollar

Natural gas prices where lower after attempting to break out on Tuesday.  Colder than normal weather is expected to cover most of the east coast for the next 6-10 days, and then the weather is expected to moderate but remain cold over the 8-14-day period. There are no tropical disturbances in the Atlantic or the Caribbean. The hurricane season is now coming to a close.  Stronger than expected industrial production could help buoy natural gas demand. Traders await Thursday’s inventory report scheduled to be released by the Department of Energy.

Technical Analysis

Prices attempted to break out on Tuesday but were unsuccessful and slumped back to close near the bottom end of the daily range down on the session. Support is seen near the 10-day moving average at 3.222. Resistance is seen near the October highs at 3.37. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a flat trajectory which reflects consolidation. The RSI is also moving sideways after dipping slightly. The current reading on the RSI is 62, which is on the upper end of the neutral range but the trajectory points to further consolidation in prices.

Industrial Production Was Strong

Industrial production increased by 0.3% month over month in September after rising 0.4% in August.  Manufacturing output grew at a 3.3%  year over year in the Q3 rising at a 5.3% climb in the Q2.  The Fed said industrial output in September had been held down by Hurricane Florence, which clobbered North Carolina in mid-September. The U.S. central bank estimated the impact of the storm on industrial production as minor. Manufacturing output increased 0.2% in September after rising 0.3% in August. IP was helped by a robust 1.7% month over month increase in automobile production which buoyed manufacturing in September. This follows a robust 4.3% increase in auto production in August.

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