Natural gas price prediction: prices fall on weak LNG exports

Natural gas prices collapsed on Tuesday, following EIA news that LNG exports declined substantially in 2020. Lack of export demand coupled with lack of demand for electricity has put substantial pressure on prices of natural gas.

Technical analysis

Natural gas prices fell 2.7% on Tuesday, which was a new low contract for August. The objective support is the continuation contract low at 1.55. Resistance is seen near the 10-day moving average at 1.77. The short-term momentum has turned negative as the fast stochastic generated a cross sell signal. The current reading on the Fast Stochastic is 3, well below the oversold trigger level of 20 which could herald a correction. Medium-term momentum remains negative as the MACD (Moving Average Divergence Convergence) histogram prints in red with a downward trajectory pointing to lower prices.

LNG exports decline

Daily deliveries of natural gas to United States facilities that produce liquefied natural gas for export were a record 9.8 billion cubic feet per day at the end of March 2020, but deliveries fell to less than 4.0 Bcf per day in June, according to the EIA. A mild winter and COVID-19 mitigation efforts have led to declining global demand for natural gas and high inventories of natural gas storage in Europe and Asia, reducing the need to import LNG.