Natural Gas Price Prediction – Prices Bounce at Support as Storms in the Atlantic Brew
Natural gas prices moved higher on Friday bouncing at trend line support. For the week prices dropped 4.7%, as demand remains flat along with supply. Volatility is relatively muted given the number of storms that are brewing in the Atlantic. There is currently one named storm, but two that have nearly a 90% chance of become a cyclone and 1 that has approximately a 60% chance. Production remains strong, but demand should be solid given the state of the economy and the robust jobs growth that has been experienced in the US.
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Technical Analysis
Natural gas prices held support near an upward sloping trend line that comes in near 2.75. A close below support would lead to a test of the July lows at 2.70. Resistance is seen near the 10-day moving average at 2.85. Momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.
Hurricanes continue to move westward in the Atlantic according to NOAA.
Jobs Data was Mixed
The US jobs data released on Friday was mixed. The headline number and hourly earning pushed yields higher, but revisions to the July and June figures the uptick in the unemployment rate and the decline in the participation rate, point to some minor weakness. The unemployment rate held near low of 3.9% percent, according to a Bureau of Labor Statistics report Friday. Expectations were for a decline to 3.8%. Expectations were for a 190K rise in the headline figure. Additionally, and most importantly, the 2.9% year over year uptick in hourly earnings was stronger than the 2.7% increase expected. On a month over month basis hourly earnings jump a robust 0.4%. The wage growth was the highest since April 2009. The participation rate fell to 62.7%, matching the lows since mid-2016. This means that less people were looking for jobs than any time in the past 2-years.