Natural Gas Price Prediction – Prices Consolidate Despite Inventory Build

Natural gas prices consolidated moving sideways forming a bull flag pattern which is a pause that refreshes higher. Prices where unaffected by a larger than expected build in natural gas inventories. The weather is expected to be colder than normal over the next 6-10 days which should increase heating demand driving up the price of natural gas.  Natural gas stocks are less than last year and well below the five-year average range for this time of year.

Technical Analysis

Natural gas prices where nearly unchanged on Thursday despite a larger than expected build in natural gas inventories.  Prices tested lower level but rallied into the close as colder than normal weather could boost heating demand. Prices made a higher high and a higher low which is a sign of an uptrend. Support is seen near the 20-day moving average at 3.36. Resistance is seen near the 2018 highs at 3.66. Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the black with a sliding trajectory which points to consolidation.

Inventories Grew More than Expected

Natural gas in storage was 3,208 Bcf as of Friday, November 2, 2018, according to EIA estimates. This represents a net increase of 65 Bcf from the previous week. Expectations where for a rise of 56 Bcf. Traders appear to be focused on the cold weather despite the larger than expected build. This is because stock piles were 580 Bcf less than last year at this time and 621 Bcf below the five-year average of 3,829 Bcf. At 3,208 Bcf, total working gas is below the five-year historical range. The trajectory of inventory builds are continuing to climb, but in the next couple of weeks, the withdrawal season will kick in and despite robust production, stockpiles will begin to fall. The weather is expected to be much colder than normal over the next 6-10 days.