Natural Gas Price Prediction – Prices Fall Breaking Through Support Despite Spike in Texas Prices

Natural gas prices broke down through trend line support as the national weather points to warmer than normal temperatures in most of the east coast and cooler than normal on the west coast. Natural gas prices throughout Texas reached record highs, with significantly higher prices than in neighboring Louisiana, where the henry hub contract on the NYMEX is settled. The price at the Waha Hub averaged $64.22/MMBtu, $40.61/MMBtu above the Henry Hub price. Producers throughout the region are reporting well freeze-offs, affecting natural gas and crude oil production at the wellhead. Northeast price increases relatively muted, reflecting near-normal winter temperatures in the region and proximity to the Appalachian production region.

Technical Analysis

Natural gas prices moved lower on Tuesday breaking through trend line support falling 2.5% and poised to test the February lows at 2.74.  Resistance is seen near the 10-day moving average at 2.98. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The RSI (relative strength index) was overbought and has moved into the neutral range which reflects accelerating negative momentum. Medium-term positive momentum has turned negative as the MACD (moving average convergence divergence) index generated 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 MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.