Natural Gas Price Prediction – All Eyes are on Hurricane Dorian

Natural gas prices eased on Friday, as traders await the impact of hurricane Dorian which is expected to hit the US during the holiday weekend. For the month natural gas prices were up slightly more than 2% and for the week, prices were up nearly 6%. Hurricane Dorian is expected to make landfall in the US on Mondaytechnical and is currently a category 3-hurricane with sustained winds at 105 miles an hour. The issue for the natural gas community is whether the storm moves south and is able to enter the Gulf of Mexico where it could hit several natural gas production facilities. The storm is expected to make landfall near Deerfield Beach Florida, and move North up the coast of Florida. Prices reflect this scenario and could surge if the storm enters the Gulf of Mexico.

Technical Analysis

Natural gas prices moved lower Hurricane Dorian continues on a path toward Florida. Expectation are for the storm to head north. Resistance is seen near the August highs 2.34. Support is seen near the 10-day moving average at 2.215. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic has been whipsawing frequently which is a sign of choppy trade. Medium-term momentum positive as the MACD (moving average convergence divergence) histogram printing in the black with a rising trajectory which points to higher prices.

Supply and Demand

Potential impacts from Hurricane Dorian are expected to be demand-related, because power outages in the Southeast may result in decreased power burn. Production in the Gulf of Mexico could also be affected, depending on the path of the storm. Supply fell in the latest week according to the EIA. The total US supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Net imports from Canada decreased by 15% from last week.