Natural Gas Price Prediction – Prices Consolidate Despite Small Inventory Build

Natural gas prices moved sideways on Thursday despite a more petite than expected build in natural gas inventories. It appears for the moment that all the good news is already priced in. The weather is expected to be much warmer than normal over the next 6-10 days, especially in the North East. Over the next 8-14 days, the weather is expected to moderate slightly in the North East but remain warmer than normal on both the East Coast and the West Coast. There are two storms in the Atlantic that have come off Africa. One has a 40% chance of turning into a tropical cyclone over the next 48-hours. The other has a very little chance.

Technical Analysis

Prices moved sideways, but the trend remains upward sloping after prices broke out on Wednesday. Support is seen near the 10-day moving average at 4.04. Target resistance is seen near the 2018 highs at 4.92. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 96, well above the overbought trigger level of 80, which foreshadows a recession. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in positive territory with an upward sloping trajectory which points to higher prices.

Inventories Rise Less than Expected

Natural gas in storage was 2,727 Bcf as of Friday, July 30, 2021, according to the EIA. This represents a net increase of 13 Bcf from the previous week. Expectations were for a 33 Bcf build, according to survey provider Estimize. Stocks were 542 Bcf less than last year at this time and 185 Bcf below the five-year average of 2,912 Bcf. At 2,727 Bcf, total working gas is within the five-year historical range.