Natural Gas Price Prediction – Prices Edge Lower Ahead of EIA Storage Report

Natural gas prices moved higher on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for inventories to rise by 114 Bcf according to Estimize. The weather in the southeast is expected to be warmer than normal for the next 2-weeks while the weather in the Midwest is expected to be cooler than normal. Overall, cooling demand is expected to be normal during the next 2-week period.

Technical Analysis

Natural gas prices edged lower on Wednesday, after testing resistance levels near the 10-day moving average at 2.40. Support is seen near the June lows at 2.30. A break of this level could lead to a test of the 2016 lows at 1.91. Prices are forming a bear flag pattern which is a pause that refreshes lower. Short term momentum has reversed and turned negative. The fast stochastic generated a crossover sell signal. The current reading of the fast stochastic is 24, just above the oversold trigger level of 20. Medium term momentum is neutral. The MACD (moving average convergence divergence) histogram is printing in the red with a rising trajectory which points to consolidation.

The Price Differential Between Japan and Europe is Driving Up Short-haul Demand

Declining price differentials between National Balancing Point in the United Kingdom and Japan LNG spot prices affected the flow of flexible.  US LNG exports, which follow global spot natural gas price benchmarks. Because the transportation costs from the US Gulf Coast to Europe are about $1.50 per million British thermal units lower than those to Asian markets, a sufficiently narrow differential will make US LNG exports to Europe more economical. Europe can now capitalize on the fact that LNG prices have decline in Asia which is allowing Europe to benefit from US natural gas flows.