Natural Gas Price Prediction – Prices Decline and Consolidate but are Poised to Test Higher Levels

Natural gas prices edged lower after testing support level early in the trading session. Prices continue to remain volatile, as storms continue to threaten infrastructure. Tropical storm Imelda is circling near the Texas Coast, and expectations are that the storm will make landfall in Texas. Tropical depression number 10 is moving across the lower Atlantic. The storm is expected to move over the outer Caribbean and eventually move northeast of the Bahamas. This storm given the current forecast is unlikely to generate issues for natural gas infrastructure. Supply in the latest week was flat while demand ticked higher.

 

Technical Analysis

Natural gas prices moved lower after breaking out on Monday above trend line resistance. Support is seen near the upward sloping trend line that comes in near 2.64. Additional support is seen near the 10-day moving average at 2.56. The formation is consolidation after a breakout. Short term momentum is flat as the fast stochastic moves sideways, with very little trajectory. The fast stochastic is chopping around generating multiple buys and sell signals. The current reading on the fast stochastic is near 90, well above the overbought trigger level of 80, which could foreshadow a correction. The MACD (moving average convergence divergence) histogram is printing in the black with a declining trajectory which points to consolidation.

Demand Rises and Supply is Flat

Total US natural gas consumption rose by 2% week over week, according to the EIA. Natural gas consumed for power generation climbed by 3% week over week. Industrial sector consumption stayed constant, averaging 21.5 Bcf per day. In the residential and commercial sectors, consumption also remained at last week’s level, averaging 8.9 Bcf per day. Natural gas exports to Mexico decreased by 1%. t. The average total supply of natural gas remained unchanged week over week according to the EIA. The average was 96.5 Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 7% from last week as exports to Canada on the Vector pipeline decreased week-on-week by 30%, dropping from a weekly average of 1.1 Bcf per day to 0.8 Bcf per day according to the EIA.