Natural gas prices tumbled on Wednesday ahead of Thursday’s inventory report. Prices decline as the weather is now expected to be more mild than previously reported over the next 8-14 days. The weather over the next 6-10 days is expected to be warmer than normal. There is currently one threat of a tropical cyclone in the Gulf of Mexico, which has a 10% chance of become a named storm. Production in the latest week decline and the warmer than normal weather across most of the Northeast is likely why there is expected to be a decline in stockpiles.
Natural gas prices tumbled on Wednesday dropping 3.4% ahead of Thursday’s inventory report. Prices are poised to test target support near the July lows at 2.21. Resistance is seen near the 10-day moving average at 2.31. Momentum has turned negative as the MACD (moving average convergence divergence) index generate 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. The fast stochastic continued to decline and is now in oversold territory. The current level of 6.5 is well below the oversold trigger level of 20 and could foreshadow a correction.
Production Fell Last Week
According to data from the EIA, the average total supply of natural gas fell by 2% compared with the previous report week. Dry natural gas production decreased by 2% compared with the previous report week as a result of the temporarily shut-in of over half of Gulf of Mexico production through this report week because of Hurricane Barry. Net imports from Canada remained the same as last week, averaging 5.3 Bcf per day.
This article was originally posted on FX Empire
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