Natural Gas Price Prediction – Prices Fall and Remain Choppy

Natural gas prices moved lower on Friday declining 3% and continued to whipsaw in a wide range. Natural gas volatility continues to rise and is generating excess price action. The weather is expected to remain cooler than normal in the northeast and warmer than normal throughout the western portion of the US. Support moved lower as production decreased and production from Canada declined.

Technical Analysis

Natural gas prices rebounded and continued to whipsaw falling 3% after rising 3.6% Thursday after dropping 4% on Wednesday. Resistance seen near the 10-day moving average at 1.95. Support is seen the 20-day moving average at 1.88 and then an upward sloping trend line that comes in near 1.80. Short term momentum is neutral as the fast stochastic continues to generate buy and sell signal. Medium-term 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 above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram has crossed the zero-index level which is also a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Supply is Down

Supply declined according to data from the EIA, the average total supply of natural gas fell by 1.0% compared with the previous report week. Dry natural gas production decreased by 0.5% compared with the previous report week. Average net imports from Canada decreased by 12.0% from last week as imports into the U.S. Pacific Northwest from Western Canada declined, especially at the Sumas border crossing point. Canadian producers may also be undergoing their annual spring maintenance when they reduce production activities as a result of warming weather and more difficult terrain.