Natural Gas Price Prediction – Prices Whipsaw Ahead of Thursday’s Inventory Report

Natural gas prices moved higher on Wednesday but settled well off session higher. There are no tropical cyclones expected in the Atlantic or Gulf of Mexico over the next 48-hours according to the National Oceanic Atmospheric Administration. The weather is expected to be warmer than normal over the next 8-14 and 6-10 days according to NOAA. Inventories of natural gas are expected to increase by 55 BCF when the EIA reported inventories according to Estimize.

Technical analysis

Natural gas prices surged higher but came off into the close to settle unchanged.  Support near the 10-day moving average at 2.12. Additional support on natural gas is seen near the August lows at 2.03. Resistance is seen near the August highs at 2.33. Short term momentum is moving higher as the fast stochastic has a positive trajectory. Medium term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).  The MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Production Will Move Higher

The EIA forecasts that US dry natural gas production will average 91.0 billion cubic feet per day in 2019, up 7.6 Bcf per day from 2018. EIA expects monthly average natural gas production to grow in late 2019 and then decline slightly during the first quarter of 2020 as the lagged effect of low prices in the second half of 2019 reduces natural gas-directed drilling. However, EIA forecasts that growth will resume in the second quarter of 2020, and natural gas production in 2020 will average 92.5 Bcf per day.