Natural Gas Price Prediction – Prices Slide on Warm Weather Forecats

Natural gas prices dropped for a third consecutive trading session losing 4.4%, following a 3% drop last week. The weather is expected to be warmer than normal throughout the mid-West over the next 6-10 days but then turning milder throughout most of the West Coast and the mid-West. There are no significant tropical disturbances in the Atlantic that are treating to become a tropical cyclone over the next 48-hours. Weak U.S. economic data weighed on natural gas prices.

Technical Analysis

Natural gas prices tumbled 4.4% after dropping 6% on Friday and falling 7.5% on Thursday. Prices are testing support near the 50-day moving average at 5.17. Resistance is seen near the 10-day moving average at 5.5. Short-term momentum reversed and turned negative as the fast stochastic generated a crossover 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 below the MACD signal line (the 9-day moving average of the MACD line).

Mixed Manufacturing and Soft Construction Spending Weigh on Prices

The Commerce Department reported that construction spending dropped 0.5% after edging up 0.1% in August. Expectations were for construction spending to gain 0.4%. Construction spending increased 7.8% on a year-on-year basis in September. The ISM survey’s forward-looking new orders sub-index dropped to 59.8 last month, the lowest reading since June 2020, from 66.7 in September. With customer inventories remaining depressed, a rebound is likely.