Natural Gas Price Prediction – Prices Fall Breaking Through Support but Prices are Oversold

Natural gas prices moved lower on Monday, hitting a lower low and a lower close which is a sign of a downtrend. Natural gas deliveries to U.S. LNG export facilities decline to the lowest level since October 2019. The weather is expected to remain warmer than normal in the mid-west and east coast for the next 2-weeks driving up cooling demand. Stronger manufacturing should also help buoy industrial demand. The opening of the economy which should include the opening of office buildings should increase electricity demand and therefore natural gas consumption.

Technical Analysis

Natural gas prices moved lower breaking through trend line support as prices made a lower low and lower close. Prices made a new low for the August contract and are poised to test the June contract lows at 1.55. Resistance on natural gas is seen near the breakdown level at 1.92 and then the 10-day moving average at 1.97. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 10, well below the oversold trigger level of 20 which could foreshadow a correction.

Natural gas Deliveries to LNG Terminals Decline

Natural gas deliveries to U producing liquefied natural gas (LNG) for export declined to 5.6 billion cubic feet per day on May 24, 2020, and averaged 6.7 Bcf per day from May 1 through May 26, according to data by the EIA. This was the lowest level of LNG feedgas deliveries since October 2019, despite 2.0 Bcf/d baseload of new liquefaction capacity that was commissioned over this period.