Natural gas daily chart, May 07, 2019

Natural Gas Price Prediction – Prices Rebound on Increasing Capacity Expansion

Natural gas prices moved higher on Tuesday but continue to trade in a downtrend. The weather is expected to be colder than normal for this time of year over the next 2-weeks, but May is generally a low demand month for natural gas and heating demand is low. Inventories continue to grow as production is rising, but additionally, expansion of natural gas pipeline into New York City could prove to be a demand driver.

Technical Analysis

Natural gas prices moved higher on Monday, making a lower low and failing to settle above resistance near the 10-day moving average at 2.556. Additional resistance is seen near the 50-day moving average at 2.70. Momentum is neutral as the fast stochastic is moving sideways generating both crossover buy and sell signals. The MACD (moving average convergence divergence) index is printing near the zero index level with a flat trajectory which also reflects consolidation.

Pipeline Expansion in New York

There new reported by the Energy Information Administration that Consolidated Edison Company of New York, the largest utility provider in the New York City area, serving 10 million customers, is looking to expand natural gas pipeline capacity into its service territory. Last week, Con Edison announced it had reached an agreement with Kinder Morgan’s Tennessee Gas Pipeline to bring additional capacity into Westchester County, just north of New York City, by November 2023. Once in service, this expansion could lift the moratorium on new natural gas customer hookups that Con Edison announced in January, which took effect on March 15. According to Con Edison, the incremental capacity increase from Tennessee Gas will bring an additional 110 million cubic feet per day  of natural gas into the area.