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Natural Gas Price Prediction – Prices Consolidate Ahead of Inventory Release

David Becker

Natural gas prices broke out on Tuesday but were unable to hold trend line support which was former resistance. Still prices consolidated and only fell 0.68%  The weather is expected to be normal with warmer than normal weather cover most of the east and west coasts, while cooler weather is hovering most of the mid-west. Trader’s now await Thursday inventory report from the Department of Energy.  Stockpiles are expected to rise by 33 Bcf according to Estimize.

Technical Analysis

 

Natural gas prices close above trend line resistance, but slipped back below consolidating its recent gains. Prices are poised to test the 3.05 highs in June, ahead of the Hurricane season. This will become the wild card for natural gas traders during the balance of the summer. Support is seen near the 20-day moving average at 2.91.  The 20-day moving average has crossed above the 50-day moving average which means that a medium term up trend is now in place. Momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices.

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EIA Forecasts Higher Production

 

EIA estimates dry natural gas production was 81.8 billion cubic feet per day in July, up 0.4 Bcf per day from June. EIA forecasts dry natural gas production will average 81.1 Bcf per day in 2018, up by 7.5 Bcf per day from 2017 and establishing a new record high. EIA expects natural gas production will rise again in 2019 to 84.1 Bcf per day.

 

EIA forecasts that pipeline exports of natural gas, which averaged 6.7 Bcf per day in 2017, will average 7.0 Bcf per day in 2018 and 8.5 Bcf per day in 2019. Increasing natural gas production in the United States and the completion of new pipelines that carry U.S. natural gas to demand centers in Mexico contribute to the expected increase. In June, two new pipelines in Mexico were placed in service that will distribute natural gas from the United States to destinations in Mexico.

This article was originally posted on FX Empire

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