Natural Gas Price Prediction – Prices Slip, as Weather Forecast Remains Warm

Natural gas prices moved lower on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for a 79 Bcd draw in stockpiles according to survey provider Estimize. While the weather is expected to be colder than normal in the eastern cities this week, the forecast over the next 6-10 days and 8-14 days shows that the weather will likely have a negative impact on prices. Supply is seen flat during the past week, according to the Energy Information Administration.

Technicals

Natural gas prices declined by 1.4% on Thursday and continue to form a bearish continuation pattern. Prices have yet to recapture the breakdown level, and trading below short-term resistance near the 10-day moving average at 2.31. Support is seen near the December lows at 2.15 and then again at a weekly upward sloping trend line that comes in near 2.05. daily medium-term momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy 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 is printing in the black but the trajectory is flattening which reflects a consolidating tone. Weekly momentum has turned negative as the MACD line generated a crossover sell signal.

Supply is Flat

Supply is unchanged week over week according to the EIA. The average total supply of natural gas remained the same as in the previous report week, averaging 100.4 Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 5% from last week.