Natural Gas Price Prediction – Prices Rise but are Likely Capped as Production Rises

Natural gas prices rose on Friday climbing for the 3^rd consecutive trading session. Prices are forming a bear flag pattern which is a pause that refreshes. Supply is rising slightly despite continued drops in rig count. The weather is expected to be warmer than normal but the increase in demand is not strong enough to offset many of the commercial buildings that are not using electricity. The spread of COVID to southern states is likely to stall the back to work effort, and put downward pressure on prices.

Technical Analysis

Natural gas prices are attempting to form a bottom, but the lack of demand is the commercial space will continue to weigh on prices. Natural gas climbed for a 3^rd consecutive trading session and is poised to test resistance near the 10-day moving average at 1.80. Support is seen near the June lows at 1.69. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic has moved from oversold territory to neutral territory which is a sign of accelerating short term positive momentum. Medium-term momentum is negative to neutral as the MACD(moving average convergence divergence) histogram prints in the red with a rising trajectory which points to consolidation.

Supply Rises in Latest Week

Supply rises due to gains in dry natural gas production. The EIA reported that the total supply of natural gas rose by 0.2% week over week as rigs were able to resume production in the wake of Storm Cristobal, which caused production shut-ins through late last week. Dry natural gas production grew by 0.5% compared with the previous report week. The average net imports from Canada decreased by 5.5% from last week.