Natural Gas Price Prediction – Prices Slide Ahead of Inventory Report

David Becker
·2 min read

Natural gas prices continued to break down on Wednesday ahead of the Thursday inventory report from the Department of Energy. Expectations are for a 276 Bcf draw in inventories which reflects the much colder than normal weather that plagued the mid-west and the south of the United States. The weather points to warmer than normal temperatures in most of the east coast and cooler than normal on the west coast. Supply fell in the latest week and production declined.

Technical Analysis

Natural gas prices moved lower on Wednesday, continuing to push through trend line support and poised to test the February lows at 2.74. Resistance is seen near the 10-day moving average at 2.99. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The RSI (relative strength index) was overbought and has moved into the neutral range which reflects accelerating negative momentum. Medium-term positive momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Supply Fell in the Latest Week

Supply falls and production declines, while imports rise to multi-year highs. According to data from the EIA, the average total supply of natural gas fell by 9.5% compared with the previous report week. Dry natural gas production decreased to 79.5 Bcf per day, 12.0% lower than in the previous report week and 15% below the same week last year as a result of lower production, mainly in the Permian Basin.

This article was originally posted on FX Empire

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