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Natural Gas Price Prediction – Prices Consolidate Following Inventory Release

David Becker
Natural gas daily chart, September 05, 2019

Natural gas prices eased after breaking out on Thursday, as the storms in the Atlantic continued to threaten. The fallout from Hurricane Dorian is devastating but the issues will not affect natural gas prices. NOAA is now tracking tropical storm Gabrielle which it has maximum sustained winds of 50-miles an hour. This storm is also not expected to hit the US. There are 2-more storms moving across the southern Atlantic. Each of approximately a 20% chance of becoming a tropical cyclone. Natural gas inventories grew more than expected, according to the Energy Information Administration (EIA).

Technical Analysis

Natural gas prices consolidated after breaking through a downward sloping trend line, that is now seen as support at 2.40.  Additional support is seen near the 10-day moving average at 2.28. Target resistance is seen near the July highs at 2.51. Short term momentum is positive as the fast stochastic generated a crossover buy signal. The fast stochastic is currently printing a reading of 90, which is well above the overbought trigger level of 80 which could foreshadow a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the 9-week moving average of the MACD line).

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Natural Gas Inventories Grew More than Expected

Natural gas in storage was 2,941 Bcf as of Friday, August 30, 2019, according to the EIA. This represents a net increase of 84 Bcf from the previous week. Expectations were for a 78 Bcf build. Stocks were 383 Bcf higher than last year at this time and 82 Bcf below the five-year average of 3,023 Bcf. At 2,941 Bcf, total working gas is within the five-year historical range.

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