Natural Gas Price Prediction – Prices Continue to Tumble Despite Active Storms Season

Natural gas prices moved lower on Friday and headed for support levels. The weather has turned milder and is likely to be warmer than normal on the west coast and cooler than normal on the east coast. There are several storms headed for the Gulf, one with a 20% chance of turning into a tropical storm in the next 48-hours and one with a 70% chance of turning into a tropical storm during the same period. There are two tropical storms in the Atlantic but neither are expected to hit natural gas installations. There are a total of 6-storms in the Atlantic or Gulf of Mexico now making this a very active time of the hurricane season.

Technical Analysis

Natural gas prices moved lower and broke down by more than 2.5%. Support is seen near the 50-day moving average at 2.24. Resistance is seen near the 10-day moving average at 2.48. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. The fast stochastic also broke down reflecting accelerating negative momentum. The current reading on the fast stochastic is 1, below the oversold trigger level of 20 which could foreshadow a correction.

Inventories Rise

Natural gas in storage was 3,525 Bcf as of Friday, September 4, 2020, according to the EIA. This represents a net increase of 70 Bcf from the previous week. Stocks were 528 Bcf higher than last year at this time and 409 Bcf above the five-year average of 3,116 Bcf. At 3,525 Bcf, total working gas is above the five-year historical range.