Natural Gas Price Prediction – Trader’s Await Storm Outlook

Hurricane Dorian remains the focus for the east coast of the United States, but other storms are brewing and gaining the attention of natural gas traders. Dorian is expected to move west and then northwest, sliding across the east coast of the United States. The storm is unlikely to damage any natural gas production facilities, and as it makes it’s way back to see, traders will turn their attention to other storms.

Technical Analysis

Weekly natural gas prices have perked up and closed above the 10-week moving average for a second consecutive week. The trend remains lower, but prices could experience a quick upward movement up to resistance near the July highs near 2.50. Support is seen near the August lows at 2.03. Weekly momentum is positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the 9-week moving average of the MACD line).

NOAA is now predicting that a storm that is in the middle of the Gulf of Mexico now has a 60% chance of turning into a tropical cyclone. The storm direction is stagnant which could become an issue if generates an alert to evacuate production rigs.  NOAA has also upgraded a storm that is coming off the coast of Africa. This storm now has an 80% chance of becoming a tropical cyclone according to NOAA. The emergence of multiple cyclones could keep natural gas volatility high during the balance of the season. Prices have been capped because the amount of production has easily covered the forecasted demand. A supply event like a hurricane that shuts-in many of the Gulf of Mexico drilling rigs would be the catalyst that drives prices higher. The rise in prices would likely be a short-term event since the demand fundamentals appear to be stable and easing.