Natural Gas Price Prediction – Prices Blast Off as Nicholas Heads to Texas

Natural gas prices surged higher on Monday as Tropical Storm Nicholas which is brewing in the Gulf of Mexico is poised to hit Texas. There is a second storm that is entering the Caribbean that has 10% change of forming a tropical cyclone in the next 48-hours. The weather is expected to remain much warmer than normal for the next two weeks, according to a report from the National Oceanic Atmospheric Administration. Production declined in the latest week.

Technical Analysis

Natural gas prices surged on Monday and was up 5.7%. Support is seen near the 10-day moving average at 4.78. Resistance is seen near the 2014 highs at 6.5. Prices are overbought as the fast stochastic prints a reading of 95 and the RSI prints a reading of 79, both above their respective overbought trigger levels. Medium-term momentum is positive as the MACD histogram prints in positive territory with an upward sloping trajectory which points to higher prices.

Supply Fell in the Latest Week

Supply of natural gas falls this report week, led by production declines in Texas. According to data from the EIA, the average total supply of natural gas fell by 1.1% compared with the previous report week. Dry natural gas production decreased by more than 0.5 Bcf per day, or 0.6% compared with the previous report week, led by declines in North Texas production, which declined on average 0.3 Bcf per day week over week. Average net imports from Canada decreased by 11.0% from last week, as flows from Eastern Canada to the Midwest reversed course.