Natural Gas Price Prediction – Prices Move Lower Ahead of Inventory Report

Natural gas prices moved lower on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 31 Bcf draw in stockpiles, according to survey provider Estimize.  The weather is expected to be warmer than normal for most of the mid-west and the East Coast for the next 6-10 and 8-14 days, according to survey provider Estimize.

Technical Analysis

Natural gas prices moved lower on Wednesday, easing approximately 1%, failing to recapture resistance which was former support near an upward sloping trend line that comes in near 2.58. Additional resistance is seen near the 10-day moving average at 2.63. the 10-day moving average recently crossed below the 50-day moving average, which means that a medium-term downtrend is now in place. Short-term momentum has flip-flopped and turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 12, below the oversold trigger level of 20, foreshadowing a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a declining trajectory which points to lower prices.

Demand Drops in Latest Week

Demand declines as both residential and commercial consumption fall to the lowest level for the same week since 2016. Total U.S. consumption of natural gas fell by 4.8% compared with the previous report week. Natural gas consumed for power generation declined by 2.9% week over week. Industrial sector consumption decreased by 0.8% week over week. In the residential and commercial sectors, consumption declined by 9.0% as warmer-than-average temperatures across most of the country depressed space heating demand. Natural gas exports to Mexico increased 3.4%.