Natural Gas Price Prediction – Prices Consolidate as Inventories Rise

Natural gas prices continued to trade sideways consolidating as traders await new data. There are no tropical cyclones expected to form in the Atlantic or Gulf of Mexico over the next 48-hours according to the National Oceanic Atmospheric Administration (NOAA). Separately, NOAA expects the weather in the US to be warmer than normal over both the next 6-10 days and 8-14 days. Both supply and demand for natural gas were higher this week according to the EIA. Natural gas inventories are estimated to be 13% higher than levels from a year earlier and 4% lower than the five-years.

Technical Analysis

Natural gas prices continue to consolidate near the 10-day moving average at 2.13. Support on natural gas is seen near the August lows at 2.03. Short term momentum is neutral as the fast stochastic moves sideways. The fast stochastic has moved up from oversold territory and are now printing a reading of 27, 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 flat trajectory which points to consolidation.

Inventories are Higher than Last Year

EIA estimates that natural gas inventories ended July at 2.7 trillion cubic feet 13% higher than levels from a year earlier and 4% lower than the five-year average. EIA forecasts that natural gas storage injections during the 2019 April-through-October injection season will outpace the previous five-year average and that inventories will rise to more than 3.7 Tcf at the end of October, which would be 16% higher than October 2018 levels and slightly above to the five-year average.