Natural gas weekly chart, October 02, 2018

Natural Gas Price Prediction – Prices Surge on Cold Weather Forecast

Natural gas prices surged higher on Monday rising 3%, as colder than normal weather is expected to cover most of the Mid-west for the next 2-weeks according to the latest forecast from the National Oceanic Atmospheric Administration. With inventories below the 5-year average range, and well below the 5-year average, prices could spike to the $12-dollar per mmbtu level according to the Citigroup Natural gas Analyst.  There are currently no tropical storms in the Atlantic or Caribbean that could threaten US natural gas installations. Imports of natural gas are also on the rise, more than doubling the US exports from 2017.

Technical Analysis

Natural gas prices moved higher and hit a fresh 8-month high on Monday. Prices also closed at a 7-month high and are poised to test target resistance near the January highs at 3.6.  Support on natural gas prices are seen near the 10-day moving average at 3.01. Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The RSI (relative strength index) also moved higher in tandem with price action which reflects accelerating positive momentum.

Exports of Natural Gas Doubled

The EIA reported that during the period January through June of 2018, net natural gas exports from the United States averaged 0.87 billion cubic feet per day , more than double the average daily net exports during all of 2017. The United States, which became a net natural gas exporter on an annual basis in 2017 for the first time in almost 60 years, has continued to export more natural gas than it imports for five of the first six months in 2018.  With inventories as historically low level and imports on the rise attracting higher prices, natural gas will likely continue to increase as the demand component is likely undervalued.