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Natural Gas Price Prediction – Prices Ease Ahead of Inventory Data

David Becker

Natural gas prices moved lower on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for inventories to decline by 3 Bcf. This follows at 9 Bcf draw in inventories in the prior week. The weather is expected to remain warmer than normal for the next 2-weeks according to the National Oceanic Atmospheric Administration. Demand is higher driven by electricity demand.

Technical Analysis

Natural gas prices edged lower with resistance near the 10-day moving average at 1.68. Support is seen near the March lows at 1.55. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory that points to consolidation. Prices are trading sideways looking for an impetus following a huge decline in short positions.

Demand Rises

Demand rises, driven by gains in the power sector. According to the EIA, total U.S. consumption of natural gas rose by 3% compared with the previous report week. Natural gas consumed for power generation climbed by 8% week over week in the low natural gas price environment. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption declined overall by 1%. Natural gas exports to Mexico increased by 1%.

This article was originally posted on FX Empire