Natural Gas Price Prediction – Prices Surge on Robust Demand

Natural gas prices rallied sharply, breaking out to 7-year highs. The weather is expected to remain warmer than average throughout most of the United States during the next two weeks. Warm weather should increase cooling demand during a period when the weather is expected to become milder. Hurricane Sam has formed in the Atlantic but it’s unlikely to impact any natural gas infrastructure. There are two additional storms that are coming off Africa which have a 60% chance of becoming a tropical cyclone in the next 48-hours

Technical Analysis

Natural gas prices surged, rising 13.0%, closing above the resistance of the most recent highs at 5.65. The next level of target resistance is seen near the 2014 highs at 6.25. Support is seen near price higher at 5.65. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Medium-term negative momentum has turned positive as the MACD (moving average convergence divergence) index 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.

Supplies Rise Slightly

U.S. supply of natural gas increases slightly as Gulf of Mexico production continues to come back online. According to data from the EIA, the average total supply of natural gas rose by 0.2% compared with the previous report week. Dry natural gas production grew by 0.3% compared with the previous report week. Natural gas production in the Gulf of Mexico continues to come back online after being almost completely shut-in following Hurricane Ida.