Natural Gas Price Prediction – Prices Slide Following Weak Inventory Draw
On Friday, natural gas prices dropped 3% following Thursday’s smaller than expected draw in natural gas inventories. The weather is expected to be normal over the next 2-weeks, and as the calendar moves into the shoulder season, builds are likely to rise. Demand declined to a four year low week over week according to a report from the Energy Information Administration.
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Technical Analysis
Natural gas prices tumbled on Friday, dropping 3%, and hitting a 5-week low. The 10-day moving average has crossed below the 50-day moving average which means a medium-term down trend is now in place. Support is seen near the January lows at 2.55. Resistance is seen near the 10-day moving average at 2.71. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are oversold. The fast stochastic is printing a reading of .28, well below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a declining trajectory.
Demand Declines in Latest Week
Demand declines as residential and commercial consumption fall to the lowest level for the same week since 2016. Total U.S. consumption of natural gas fell by 4.8% compared with the previous report week. Natural gas consumed for power generation declined by 2.9% week over week. Industrial sector consumption decreased by 0.8% week over week. In the residential and commercial sectors, consumption fell by 9.0% as warmer-than-average temperatures across most of the country depressed space heating demand. Natural gas exports to Mexico increased 3.4%