Natural Gas Price Prediction – Prices Drop as Inventories Build More than Expected

Natural gas prices whipsawed moving lower on Thursday following a slightly larger than expected build in natural gas inventories. Prices have whipsawed back and forth for 4-straight trading session. Today’s 6% decline followed Wednesday 7% rise and Tuesday’s 5% decline and Monday’s 12% rise. Volatility on natural gas prices remains elevated. Natural gas implied volatility is very high, and it appears that the actual is keeping pace. 30-day implied volatility is hovering near 80% which means that natural gas prices need to move 5% each day.

Technical Analysis

Natural gas is whipsawing and chopping sideways but was able to hold support near the 50-day moving average at 1.79. Resistance is seen near the April highs at 1.97. It appears the trend is upward sloping as the 10-day moving average is poised to cross above the 50-day moving average. Short term momentum has whipsawed and turned negative as the fast stochastic generated a crossover sell signal. Prices action is choppy, and the with current ranges you would to buy the dips and sell the rallies.

Inventories Grew More than Expected

The EIA reported that natural gas in storage was 2,140 Bcf as of Friday, April 17, 2020, according to EIA estimates. This represents a net increase of 43 Bcf from the previous week. Stocks were 827 Bcf higher than last year at this time and 364 Bcf above the five-year average of 1,776 Bcf. At 2,140 Bcf, total working gas is within the five-year historical range.