Natural Gas Price Prediction – Inventories Surpass 5-year Average Range

Natural gas prices moved slightly higher despite natural gas inventories moving above the 5-year average for this time of year. Tropical storm Nestor is expected to turn into a hurricane and move toward the Louisiana coast. The more west the storm goes the more likely it is to disrupt some natural gas installations. The weather is expected to be cooler than normal over the next 8-14 days according to the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices edged higher on Friday bouncing near support at the 10-day moving average at 2.28. Resistance is seen near the October highs at 2.38. Short term momentum is positive as the fast stochastic continues to move higher. Additionally, the current reading on the fast stochastic is 59, which is above the upper half of the neutral range. Medium-term momentum as turning and the MACD (moving average convergence divergence) is poised to generate a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Natural Gas Storage Rises Above the Average

Natural gas inventories totaled 3,519 billion cubic feet for the week ending October 11, 2019, according to the Energy Information Administrations. This is the first week that working gas inventories have exceeded the previous five-year average since September 22, 2017, according to the EIA. Weekly injections in three of the past four weeks each surpassed 100 Bcf, or about 27% more than typical injections for that time of year. Working natural gas capacity at underground storage facilities helps market participants balance the supply and consumption of natural gas.