Natural Gas Price Prediction – Prices Drop Ahead of Inventory Report

Natural gas prices moved lower on Wednesday breaking down ahead of Thursday’s inventory report. Expectations are for a 23 Bcf draw in stockpiles according to survey provider Estimize. US natural gas consumption is expected to decline year over year in 2020 according to the EIA. The weather is expected to be warmer than normal throughout most of the United States for the next 2-weeks according to NOAA.

Technical Analysis

Natural gas prices broke down on Wednesday falling nearly 4%, and poised to test target support near an upward sloping trend line that comes in near 2.68. Resistance is seen near the 10-day moving average at 2.84. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 21, just above the oversold trigger level of 20. Medium-term momentum has flip-flopped and is poised to turn negative as the MACD (moving average convergence divergence) is poised to generate a crossover sell signal.

The EIA Expects Consumption to Fall

EIA expects that total U.S. consumption of natural gas will average 83.7 billion cubic feet per day in 2020, down 1.7% from 2019. The decline in total U.S. consumption reflects less heating demand in early 2020, contributing to residential demand in 2020 averaging 13.2 Bcf/d and commercial demand in 2020 averaging 8.8 Bcf. EIA forecasts industrial consumption will average 22.5 Bcf/d in 2020, down 0.6 Bcf/d from 2019 as a result of reduced manufacturing activity.