Natural Gas Price Prediction – Prices Settle Off Their Highs after Testing Resistance

Natural gas prices rose on Tuesday but finished off the session highs. The weather is expected to be warmer than normal during the next two weeks, according to NOAA. There are no tropical cyclones expected to form in the Atlantic during the next 48-hours. The recently completed pipeline projects in Texas will reduce the basis risks.

Technical Analysis

Natural gas prices moved higher but failed to take out resistance near the May highs at 3.2, and close closer to the session lows. Support is seen near the 10-day moving average at 3.04. Short-term momentum whipsawed and and moved higher as the fast stochastic generated a crossover buy signal. Medium-term momentum is flat as the MACD (moving average convergence divergence) histogram is printing near the zero-index level with a flat trajectory which points to consolidation.

New Pipelines Reduce Basis

Recently completed pipeline projects in Texas and Mexico have increased natural gas transportation capacity from the Waha Hub. This area is a production center and occasionally a large basis with the Henry hub location. Since October 2020, two completed projects in Texas and two completed projects in Mexico have increased the Waha Hub’s connectivity to demand markets and, in turn, reduced the price difference between natural gas at the Waha Hub and the Henry Hub.