Natural Gas Price Prediction – Prices Slip but Rise 5.4% for the Week

Natural gas prices moved sideways on Friday finishing the week up 5.4%. A smaller than expected build in natural gas inventories reported this week by the Department of Energy gave prices a boost. Demand increased this week as the electric power sector drew more for turbines, and production during the week was flat.

Technical Analysis

Natural gas prices moved higher this week but edged slightly lower on Friday following gains on Thursday. Prices made a higher high and a lower high but were unable to close the session in the black. Medium term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occur 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 with an upward sloping trajectory which points to higher prices. The RSI is moving sideways and printing a reading of 43, which is in the middle of the neutral range and reflects consolidation.

Demand increases are driven by the electric power sector. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 8% week over week amid temperatures that were slightly warmer than normal in the Southeast region, where electricity is used for cooling demand. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption declined by 1%. Natural gas exports to Mexico were the same as last report week, averaging 5.2 Bcf per day.